Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, made the low at 98.075 and rallied to the session high by mid-session at 100.75. It consolidated and settled near the high at 100.30. It was a breakout session for the hogs, pulling away from the key level at 98.475 and never looking back. It raced past resistance at 100.075 and was able to settle above it. This is a positive for the market and puts resistance at 101.975 in traders cross-hairs. Traders took price higher as cash fundamentals remain strong and with the steep discount in the October contract to the index as August nears expiration, they decided to narrow it a touch, in my opinion. If settlement holds, we could move towards resistance at 101.975. Resistance then comes in at 104.35. A break down from 100.075 could see price test support at 98.475.
The Pork Cutout Index decreased and is at 126.83 as of 8/05/2022.
The Lean Hog Index increased and is at 122.09 as of 8/04/2022.
Estimated Slaughter for Monday is 458,000, which is above last week’s 408,000 and last year’s 456,000.
September Feeder Cattle opened higher, made the session low at 183.50 and rallied to the session high at 186.25 by late morning. It dipped lower and settled at 185.65. Stable corn and expectations of a tightening supply of cattle inspired bulls this session, in my opinion. The rally took price past resistance at 184.375 and 185.80 with settlement just under the latter level. This is the highest the lead contract has been since October 2015. If Feeders can hold settlement, we could see price test resistance at 187.20. Resistance then comes in at 188.95. A failure from settlement could see futures test support at 184.375. Support then comes in at 182.70.
The Feeder Cattle Index decreased and is at 174.04 as of 8/02/2022.
October Live Cattle made a new high for the up move. It opened lower, made the low at 143.80 and rallied to the session high at 144.85 by mid-session. It pulled back and settled at 144.225. Cash ended last week on a firm note and expectations are for cash to continue higher this week. Price is now starting to revolve around the 144.025 key level and further strength off here could see price test resistance at 145.225 and then work its way towards resistance at 146.825. A failure from settlement could see price pull back towards support at 142.225. Support then comes in at 140.175.
Boxed beef cutouts were higher as choice cutouts increased 1.62 to 266.24 and select rose 0.19 to 238.86. The choice/ select spread widened and is at 27.38 and the load count was 105.
Monday’s estimated slaughter is 119,000, which is below last week’s 124,000 and above last year’s 113,000.
The USDA report LM_Ct131 states: Thus far for Monday in the Southern and Nebraska negotiated cash trading has been at a standstill. In the Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases for a market trend. Last week in the Texas Panhandle live purchases traded from 135.00-136.00. In Kansas last week live purchases traded at 136.00. For the prior week in Nebraska live purchases traded from 140.00-143.00 and dressed purchases at 227.00. For the previous week live purchases ranged from 141.00-147.00 and dressed purchases ranged from 225.00-232.00
The USDA is indicating cash trades for live cattle at 146.00 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, August 11, 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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