Walsh Trading Daily Insights
Commentary
June Lean Hogs opened higher and traded to a new high for the up-move at 110.075. Traders took this as a selling opportunity and proceeded to pummel hogs, taking them down the rest of the session and going down limit at the end of the day. Fortunately, hogs settled down 2.80 at 106.15 so limits will not be expanded. I think it was a combination of the price level (110.00 is a psychological big number) (in my opinion) and cutouts declining in the morning at a smaller load count that set off the profit taking. Sometimes (at extreme levels), when you miss getting your price on an out, you just hit the panic button and it looks like that was the case today. Selling cascading on selling as frustrated longs decided to get out at the same time after missing the top. Bullish fundamentals are still in play in my opinion, but there are a lot of longs in the market that may feel it is time to book some profits. The massive selloff also created a bearish engulfing candlestick formation so buyers beware…. A weaker open on Tuesday could ignite more selling. The low for Monday came in at 105.95. A failure from the low could see support tested at 104.35. If price can push above resistance at 106.85, a test of resistance at 107.925 is possible. Resistance then comes in at 109.85 and the Monday high.
The Pork Cutout Index increased and is at 110.67 as of 4/09/2021.
The Lean Hog Index increased and is at 101.37 as of 4/08/2021.
Estimated Slaughter for Monday is 494,000 which is above last week’s 325,000 and last year’s 306,000.
May Feeder Cattle drifted and stayed within Friday’s trading range forming an inside candlestick. The range was 150.75 high to the 149.325 low. It settled near the low at 149.70, which is below the key level at 149.975. A failure from the low could see price test support at 148.40. Support then comes in at 147.30. If price can get above 149.975, we could see a re-test of resistance at 151.55. Resistance then comes in at 152.30. The Feeder Cattle Cash Index is rising, but is still far below the futures price.
The Feeder Cattle Index increased and is at 143.36 as of 4/09/2021.
June Live Cattle drifted lower, basically trading between the key levels at 122.825 and 121.90. The session range was 122.975 and 121.775. It settled at 122.10. Cutouts took a little breather with choice cutouts slightly lower on the day. Cash did not trade so far on Monday and probably won’t until Wednesday, especially if futures continue to move lower. If cattle can hold settlement, a re-test of resistance at 122.825 is possible. Resistance then comes in at 124.30. A failure from the low could see price test support at 120.80 and then 119.375.
Boxed beef cutouts were mixed as choice cutouts declined 0.76 to 271.41 and select increased 2.09 to 266.16. The choice/ select spread narrowed to 5.25 and the load count was 112.
Monday’s estimated slaughter is 112,000, which is above last week’s 105,000 and last year’s 88,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been a t a standstill in the 5 Area Feeding Region. Last in the Southern Plains live purchases traded at 120.00. For the prior week in Nebraska live and dressed purchases traded mostly at 123.00 and 195.00, respectively. Last week in Colorado live purchases traded from 120.00-123.00. For the previous week in the Western Cornbelt live and dressed purchases traded mostly from 123.00-125.00 and 195.00-196.00, respectively.
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 15, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.