Walsh Trading Daily Insights
Commentary
June Lean Hogs opened lower, traded down to the session low at 103.725 and then rallied to the session high at 105.60. It settled at 105.225. The trade down to the session low closed some of the gap created on the strong Friday open after the Hogs and Pigs report on Thursday afternoon. The remaining gap is from 103.55 to 103.725. This is a support area. Settlement was above the key level at 104.35. If price can stay above settlement, a test of resistance at 85 is possible. Resistance then comes in at 107.925. A failure from 104.35 could see the gap challenged again. Support then comes in at 101.975.
The Pork Cutout Index increased and is at 107.20 as of 3/26/2021.
The Lean Hog Index increased and is at 95.97 as of 3/25/2021.
Estimated Slaughter for Monday is 492,000 which is above last week’s 481,000 and below last year’s 495,000.
May Feeder Cattle surged on Monday, trading past resistance at 152.30 to the session high at 153.175. It pulled back and settled just below resistance at 152.20. Stronger cash prices are fueling futures to anticipate even higher cash prices. The Feeder Cattle Index jumped to 138.85, but is still at a steep discount to futures. Traders are giving cattle producers hope… that the cash depression is over…. And an opportunity for producers to make some money in the cattle business. We need to see the Live cattle cash market run higher sooner rather than later to help sustain feeder prices or it will be a losing proposition for producers in the long run, in my opinion. If price can break out above 152.30, we could see a test of resistance at 153.50. Resistance then comes in at 154.25. A failure from settlement, could see price test support at 151.55. Support then comes in at 149.975.
The Feeder Cattle Index jumped and is at 138.85 as of 3/26/2021.
June Live Cattle opened higher and dipped to the session low at 121.60. The bulls stampeded and price raced to the session high at 123.50. The stampede was contained and price broke-down approaching the low. It settled in the middle of the range at 122.65. It made a new high, surpassing the March 18th high at 122.70. Settlement, however, was below resistance at 122.825. On a positive note, this is the second settlement above the rising 50 DMA (121.41). If price can trade above 122.825, a test of the Monday high is possible. If price can overtake the high a test of resistance at 124.30 is possible. A failure from settlement could see support re-tested at 121.90. Support then comes in at 120.80. The higher cash prices achieved last week after a long period of stagnant prices has given producers expectations of a break out to higher cash prices going forward, in my opinion. Futures traders are looking for higher cash prices too or they wouldn’t be bidding up the futures price to new highs. Boxed beef is strong, as restaurants are opening up and corn is in a trading range, giving stability in feed prices, so maybe the light at the end of the tunnel is getting closer.
Boxed beef cutouts were higher as choice cutouts increased 1.87 to 239.53 and select surged 4.73 to 232.50. The choice/ select spread narrowed to 7.03 and the load count was 96.
Monday’s estimated slaughter is 119,000, which is above last week’s 116,000 and even with last year.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the Southern and Northern Plains. In the Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 115.00. For the prior week in the Northern Plains live purchases traded mostly at 116.00 and dressed purchases, in Nebraska, traded at 185.00. For the previous week in the Western Cornbelt live purchases traded from 115.00-117.00 and dressed purchases traded at mostly at 185.00.
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, April 1, 2021 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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