Walsh Trading Daily Insights
Commentary
June Lean Hogs opened lower and collapsed, trading down to the low of the session at 103.525 and then recovered, trading higher the rest of the session to the high at 107.20. Outside market decay as Equity markets were hammered created negative sentiment in the commodity markets. Cutouts led the way higher, in my opinion as demand seems to be holding for pork. The breakdown took price below support at 104.35 and the rally took price past resistance at 106.85, but settlement was below it at 106.675. The breakdown was to a new low for the down move, bit the rally to the high took price past the Friday high creating an outside day up candle. This could be supportive for hog futures. If price can reclaim the 106.85 level, we could test resistance at 107.925. Resistance then comes in at 109.85. A failure from settlement could see price revisit support at 104.35. Support then comes in at 101.975.
The Pork Cutout Index ticked higher and is at 107.84 as of 6/10/2022.
The Lean Hog Index dipped and is at 107.19 as of 6/09/2022.
Estimated Slaughter for Monday is 473,000, which is below last week’s 475,000 and last year’s 474,000.
August Feeder Cattle gap opened lower and crashed. It broke down to the session low at 169.40 in the first hour and fifteen minutes and then limped higher the rest of the session to settle at 171.325. The gap is from the Monday high at 173.75 to the Friday low at 174.025. With the strong rally early last week that ended in a bearish Evening Star candlestick pattern and the equity debacle, plus futures are still way over the cash index, a strong pullback was overdue, in my opinion. Futures are still strong compared to the index so I believe bulls should be wary. The breakdown took price below support at 172.00 and then 169.95. The recovery wasn’t able to overcome 172.00, so sentiment remains negative, in my opinion. A break down from settlement could see support re- tested at 169.95. Support then comes in at the rising 50-DMA now at 168.075. If price rally past 172.00 we could see price test resistance at 173.325 and then the gap. Resistance then comes in at 175.70
The Feeder Cattle Index decreased and is at 160.29 as of 6/10/2022.
August Live Cattle also gap opened lower and crashed. It opened below the 200-DMA now at 135.50, making the high just below it at 135.475 and then rushed to the session low at 132.45. The breakdown took price below support at 134.55 and 132.95. Futures were able to get back above 132.95 but, it settled weak at 133.875. The Equity market crash created negative sentiment for beef demand as expectations are rising the Fed could surprise and raise rates 75 basis points on Wednesday. With inflation out of control, traders are positioning themselves for a fed shock to the markets. A 75-basis point hike would damage consumer spending and put beef at the bottom of the consumer purchasing plans. Settlement was below the key level at 134.55. A failure from settlement could see price re-test support at 132.95. Support then comes in at 130.45. If price can overtake 134.55, we could revisit the 200-DMA. Resistance then comes in at 136.35.
Boxed beef cutouts decreased as choice cutouts decreased 0.78 to 270.54 and select decreased 1.44 to 247.45. The choice/ select spread widened and is at 23.09 and the load count was 93.
Monday’s estimated slaughter is 125,000, which is even with last week and above last year’s 117,000.
The USDA report LM_Ct131 states: So far for Monday in the Southern and Northern Plains negotiated cash trading has been at a standstill. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. Last week in the Texas Panhandle live purchases traded at 136.00. In Kansas live purchases traded at 137.00. For the prior week in Nebraska live and dressed purchases traded from 141.00-143.00 and from 225.00-226.00, respectively. In Colorado live purchases traded at 141.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 141.00-143.00 and at 225.00, respectively.
The USDA is indicating no cash trades for live cattle and 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, June 16, 2022 at 2:00 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
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Fax: 312.256.0109
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