Walsh Trading Daily Insights
Commentary
August Lean Hogs is now the lead contract as its volume has surpassed the volume in the July contract. It opened lower and made the session low at 107.40. This is right on the 8-DMA and price surged from here, rallying the rest of the session to the high at 110.225. It settled near the high at 109.80. The cash market is strong and cutouts have rebounded after floundering the past few weeks. The rally took price past resistance at 109.85 and long-term moving average resistance at the 100 and 50-DMAs (108.875 and 109.45 respectively). It settled between these levels and needs to punch through to create more energy to the upside, in my opinion. A rally past the high could see price test resistance at 111.675. A failure from settlement could see price revisit the Tuesday low. Support then comes in at 106.85.
The Pork Cutout Index increased and is at 110.18 as of 6/20/2022.
The Lean Hog Index increased and is at 109.16 as of 6/17/2022.
Estimated Slaughter for Tuesday is 468,000, which is below last week’s 469,000 and below last year’s 474,000. Monday’s slaughter was revised downward to 449,000. The estimated total for the week (so far) is 917,000, which is below last week’s 929,000 and last year’s 941,000.
August Feeder Cattle gap opened higher and made the session low at 174.15. It never looked back from here, rallying the rest of the session to the high at 176.10. The rally took price past resistance at 175.70 and it pulled back below here to settle at 175.30. The gap is from the Friday high at 173.70 to the Tuesday low at 174.15. The Feeder Index has surged since making a low on Thursday at 160.08. Feedlots have been aggressive in buying cattle and corn prices collapsed on Tuesday when many were expecting a surge as a heat wave grips the nation. A break down from settlement could see the gap tested. If price rallies past the Tuesday high, we could see a test of the June 9th high at 176.875. Resistance then comes in at 178.95.
The Feeder Cattle Index increased and is at 165.03 as of 6/20/2022.
August Live Cattle opened higher drifted. It made the high at 137.25 and the low at 135.975, and it settled near the low at 136.25. Price is land-locked between the 100-DMA at 137.475 and the 200-DMA at 135.725. Cash has been quiet so far this week with light trading in Texas. Futures are waiting for more information from the cash market, especially from the southern region. A failure from settlement could see price test support at the 200-DMA. Support then comes in at 134.55. If price can overtake the 100-DMA and resistance at 137.875, we could see a test of resistance at 138.60. Resistance then comes in at 140.175.
Boxed beef cutouts increased as choice cutouts increased 1.06 to 267.56 and select increased 0.31 to 246.70. The choice/ select spread widened and is at 20.86 and the load count was 143.
Tuesday’s estimated slaughter is 126,000, which is above last weeks and last year’s 122,000. The estimated total for the week (so far) is 250,000, which is above last week’s 242,000 and last year’s 239,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been at a standstill in Kansas, Northern Plains and Western Cornbelt. In the Texas Panhandle negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend in any region. Last week in the Texas Panhandle live purchases ranged from 136.00-140.00. In Kansas live purchases traded at 140.00. For the prior week in the Northern Plains and Western Cornbelt live purchases traded at 145.00 and, in Nebraska and Western Cornbelt, dressed purchases traded at 230.00.
The USDA is indicating cash trades for live cattle at 138.50 and nothing 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 Friday, June 24, 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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