Walsh Trading Daily Insights
Commentary
July Lean Hogs is now the lead contract as its volume has overtaken the volume of the June contract. It opened higher and rallied to the session high at 84.275. It turned around and fell to the session low at 81.925. It consolidated the rest of the session and settled at 82.15. The breakdown took price below support at 83.325 and it stopped just shy of support at 81.70. Settlement was near the low, indicating potential continued weakness. If support fails at 81.70, we could see price test the 80.40 support level. Support then comes in at 79.80. If settlement holds, we could see some short-covering and test resistance at 83.325. Resistance then comes in at the declining 100-DMA now at 84.15.
The Pork Cutout Index increased and is at 83.83 as of 5/19/2023.
The Lean Hog Index increased and is at 79.13 as of 5/18/2023.
Estimated Slaughter for Monday is 473,000, which is above last week’s 464,000 and last year’s 462,000. Friday’s slaughter was revised lower to 458,000.
August Feeder Cattle opened weaker and was under pressure early, trading to the session low at 232.55 around 9:30 AM CT. It found its footing and rallied the rest of the session to the high at 235.10. It settled near the high at 234.90. The breakdown took price below support at 233.10 and the high and settlement was above the key level at 234.475. Higher corn seemed to be the key early and talk about strong sales of feeder weight cattle strengthened the resolve of bullish traders, in my opinion. If price can hold settlement, we could see price test resistance at 235.95. A failure below 234.475, could take price back down to support at 233.10. Support then comes in at 229.825.
The Feeder Cattle Index jumped and is at 204.70 as of 5/19/2023.
August Live Cattle opened lower, made the high at 164.25 and traded down to the low at 162.775. The high and low were in by around 9:30 AM CT with the low testing support at 162.725. Trade was done as it consolidated the rest of the session and settled at 163.60. Last week’s cash average was above the prior week but it didn’t help futures. It seems traders are content with keeping futures at a discount to the cash market as they may be thinking cash will come down some as we move forward. A rally past the high could see price test resistance at 164.90. If price can’t hold settlement, we could retest the low. A failure below 162.725 could see price revisit support at 161.75. Support then comes in at 160.75.
Boxed beef cutouts were mixed as choice cutouts jumped 2.80 to 303.90 and select dipped 0.51 to 283.43. The choice/ select spread widened and is at 20.47 and the load count was 95.
Wednesday’s estimated slaughter is 125,000, which is below last week’s 126,000 and even with last year.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in all regions. The latest established market was last week in all regions. In the Southern Plains live purchases traded at 170.00. In Nebraska live and dressed purchases traded at 178.00 and from 280.00-282.00, respectively. In the Western Cornbelt live and dressed purchases traded from 177.00-180.00 and from 280.00-282.00, 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, May 25, 2023 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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