Walsh Trading Daily Insights
Commentary
October Lean Hogs followed through to the downside in the early going, trading to its lowest level in the past 9 sessions at 95.575. This is just above support at 95.30 and buyers came back in to the market taking price higher. It rallied the rest of the session and made the high at 98.45, which is just under resistance at 98.475. Price dipped and settled at 98.05. Traders fear that hog supplies will surge and prices crash as we move towards the fall. Hog supplies normally increase into the fall as a slump in demand occurs due to school starting and grilling season winds down. Slaughter numbers have not ratcheted higher as expected but cutout prices have behaved erratically recently. The index has declined while cash hogs have remained strong. Cash hogs were sharply higher in the earl going today, lending some support to the futures. Export sales are out before the open and I believe traders will be watching closely to see if China remains in the market for the third week in a row. Price is still below resistance at 98.475 `and the 200-DMA at 99.30. These are important hurdles for futures to get over to get Hogs back on track. A failure from settlement could see price re-visit the Wednesday low and then support at 95.30.
The Pork Cutout Index decreased and is at 122.90 as of 8/16/2022.
The Lean Hog Index declined and is at 121.06 as of 8/15/2022.
Estimated Slaughter for Wednesday is 478,000, which is above last week’s 474,000 and last year’s 473,000. The estimated total for the week is 1,396,000, which is below last week’s 1,406,000 and last year’s 1,419,000.
September Feeder Cattle followed through to the upside on Wednesday, trading to a new high for the up move at 187.775. It made the low at 184.50 and settled at 187.125. It broke out above the 186.325 – 182.05 trading range but wasn’t able to settle above the 187.20 resistance level. The market never likes to make things easy, in my opinion. This keeps resistance at 187.20 and a break out above here could see price test resistance at 188.95. A pullback from settlement could see price test support at 185.80. Demand has been strong for feeder cattle and the index has strengthened but futures are once again pulling away from the index. The grain markets were mixed with corn and beans higher and wheat lower. Traders are comfortable with the price action in the grain market but with any real strength in the grains with the futures over the index could put some pressure on futures, in my opinion.
The Feeder Cattle Index increased and is at 179.89 as of 8/16/2022.
October Live Cattle rallied to a new high for the up move at 146.25 as cash prices continue to show strength. Trade reached 150.00 this week and the 5-area average is moving higher so far this week over last week. The low was at 145.175, which is just below support at 145.225. Settlement was at 145.85 which is above support at 145.225 which puts resistance at 146.825 in traders cross-hairs. It formed a Doji candlestick however, indicating indecision at these high prices. An inability to hold above settlement could see support at 145.225 revisited. A failure from 145.225 could see price pull back towards support at 144.025. Support then comes in at 142.225.
Boxed beef cutouts were lower as choice cutouts decreased 1.10 to 264.34 and select declined 1.23 to 237.89. The choice/ select spread widened and is at 26.45 and the load count was 145.
Wednesday’s estimated slaughter is 126,000, which is even with last week and above last year’s 120,000. The estimated total for the week (so far) is 373,000, which is above last week’s 371,000 and last year’s 360,000.
The USDA report LM_Ct131 states: So far for Wednesday in the Southern Plains, Nebraska and Western Cornbelt negotiated cash trading has been limited on light demand. In the Southern Plains, a few, live purchases traded at 141.00. In the Western Cornbelt, a few, live purchases traded at 147.00. However, not enough purchases in any region for a full market trend. Last week in the Southern Plains live purchases traded at 140.00. For prior week in Nebraska live and dressed purchases traded from 144.00-148.00 and from 229.00-230.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded from 146.00-148.00 and at 229.00, respectively.
The USDA is indicating cash trades for live cattle from 141.00 – 150.00 and from 230.00 – 236.00 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 18, 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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