Walsh Trading Daily Insights
Commentary
June Lean Hogs started the week on weakness, gap opening lower and breaking down through support at 101.975 to the session low at 100.55. The high was at 103.35 and settlement was below support at 101.30. Weakness throughout equity and commodity markets and continued strength in the US dollar putting pressure on Hogs. Cash fundamentals have also been limiting as traders wait for the bullish seasonal patterns to take hold going forward. The gap created by Monday’s price action is from the Friday low at 103.70 to the Monday high. The breakdown in Hogs also took price below the rising 100-DMA now at 102.15. If price fails at settlement, we could see a test of support at 100.075. Support then comes in at 98.475. A reversal on Tuesday could see price visit resistance at 101.975 and the rising 100-DMA.
The Pork Cutout Index ticked higher and is at 105.43 as of 5/06/2022.
The Lean Hog Index ticked lower and is at 100.91 as of 5/05/2022.
Estimated Slaughter for Monday is 468,000, which is below last week’s 482,000 and last year’s 477,000. Friday’s slaughter was revised lower to 444,000, which brings the estimated total for the week (so far) to 2,414,000, which is above last week’s 2,389,000 and last year’s 2,396,000.
August Feeder Cattle opened higher, traded to the session high at 175.30 and then collapsed to the low at 171.85. Price reversed course and rallied to just under the session high and then drifted lower to settle at 174.225. The breakdown took price below support at 172.00 and the recovery took price above the key level at 173.325. The high was just below resistance at 175.70. If price can hold settlement, we could see a re-test of resistance at 175.70. Resistance then comes in at the May 4th high at 177.50. A failure below 173.325, could see price revisit support at 172.00. Support then comes in at 169.95.
The Feeder Cattle Index increased and is at 156.21 as of 5/06/2022.
June Live Cattle gap opened lower and broke down to the low of the day at 131.025. This was a breakdown below the 2-month consolidation band from a high of 140.00 to the low at 132.375. The price action looked bleak and then it stalled and caught a bid, rallying to the session high at 133.875. It settled near the high at 133.55. The rally put price back in the consolidation band with a new low for the band. With the bleakness exhibited in the outside markets, futures are probably going to struggle if we don’t get a turnaround in the equity markets. A weakening equity market could continue to cause problems for cattle futures. Cash market is holding at steady prices above 143.00 (last Week’s approx. average) and we saw a small trade at 140.00 to start this week. Settlement was above the key level at 132.95 and a breakdown from here could see price re-test the Monday low and then support at 130.45. If price hold settlement, we could see price test resistance at 134.35. Resistance then comes in at the rising 200-DMA now at 134.95 and then 136.35. There is a gap from the April 22nd low at 138.35 and the April 25th high at 136.85.
Boxed beef cutouts were mixed as choice cutouts surged 3.85 to 258.29 and select decreased 1.93 to 243.13. The choice/ select spread widened and is at 15.16 and the load count was 131.
Monday’s estimated slaughter is 121,000, which is above last week’s 111,000 and last year’s 113,000.
The USDA report LM_Ct131 states: So far for Monday in the Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases for a market trend. In the Southern and Northern Plains negotiated cash trading has been at a standstill. Last week in the Southern Plains live purchases traded at 140.00. In Nebraska live and dressed purchases traded at 146.00 and 232.00, respectively. In Colorado live purchases traded from 142.00-148.00. In the Western Cornbelt week live and dressed purchases traded from 144.00-147.00 and from 230.00-232.00, respectively.
The USDA is indicating cash trades for live cattle at 140.00 and none on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, May 12, 2022 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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