Walsh Trading Daily Insights
Commentary
June Lean Hogs followed through to the downside on Friday, nearly going down the expanded limit as it made the session low at 100.925. The breakdown closed the gap from the March 25 high at 103.55 to the March 29 low at 103.725 and after some consolidation around the gap area, broke down to the low. It settled at 101.70. If price can push above resistance at 101.975, consolidation within the Friday range is possible. A failure from settlement could see support tested at 100.075. Support then comes in at 98.175. Bad sales numbers overall and especially from China on Thursday’s export sales report, has spooked traders into profit taking mode as they are buying into China’s narrative that it doesn’t need pork. In my opinion, they do and are hoping this delay in purchases will lead to a decline in pork prices so they can make a big purchase on the cheap. Pork prices however, remain strong as there must be demand coming in from somewhere else…..like the food service industry, cash rich consumers and other importers. China will be back making purchases and don’t forget…they were the largest destination for last week’s exports at 12,500 MT. Gee, I wonder what Smithfield was doing last week with their sales department with the home country on the sidelines. Chess, anyone!
The Pork Cutout Index increased and is at 111.92 as of 4/15/2021.
The Lean Hog Index increased and is at 103.03 as of 4/14/2021.
Estimated Slaughter for Friday is 468,000 which is even with last week and above last year’s 405,000. Thursday’s slaughter was revised lower to 474,000. Saturday’s slaughter is expected to be 75,000, which is lower than last week’s 184,000 and last year’s 217,000. The weekly estimated slaughter is estimated to be 2,469,000, which is above last week’s 2,445,000 and last year’s 2,239,000.
August Feeder Cattle is now the lead contract as its volume has surpassed the May contract’s volume. It tested resistance at 156.075 on the continuous chart making the session high at 156.20. It broke down from here and traded past support at 154.25 to the session low at 153.875. It settled above support at 154.55. A failure from support at 154.25 could see price test support at 153.50. Support then comes in at 152.30. If price can rally from settlement, we could see a re-test of resistance at 155.275 and then 156.075. Resistance then comes in at 157.30.
The Feeder Cattle Index decreased and is at 141.68 as of 4/15/2021.
June Live Cattle consolidated within Thursday’s trading range. The session high was at 120.15 and its low was at 119.00. It settled at 119.175. Settlement was below the key level at 119.375. If cattle can rally past 119.375, a re-test of resistance at 120.80 is possible. Resistance then comes in at the 21 and 50 DMAs, both are at 121.65. A failure from settlement could see price test support at the rising 100 DMA now at 118.625. This should be strong support. If this level fails to contain the selling a test of support at 117.825 is possible.
Boxed beef cutouts were mixed as choice cutouts declined 0.57 to 276.05 and select increased 0.67 to 269.10. The choice/ select spread narrowed to 6.95 and the load count was 88.
Friday’s estimated slaughter is 113,000, which is above last week’s 111,000 and last year’s 86,000. Saturday slaughter is expected to be 70,000, which is above last week’s 66,000 and last year’s 38,000. The weekly estimated total is expected to be 640,000, which is below last week’s 641,000 and above last year’s 486,000.
The USDA report LM_Ct131 states: Thus far for Friday in Colorado negotiated cash trading has been limited on light demand. Compared to last week live purchases traded unevenly steady at 122.00. So far for Friday the Southern Plains and Nebraska negotiated cash trading has been mostly inactive on light demand. In the Western Cornbelt negotiated cash trading has been slow on light demand, with a few live purchases at 123.00. However, not enough purchases in these regions for a market trend. Thursday was the last fully reported market in these regions. In the Texas Panhandle live purchases traded at 120.00. In Kansas live purchases traded from 120.00-121.00. In Nebraska live and dressed purchases traded from 123.00-124.00 and 196.00, respectively. In the Western Cornbelt live and dressed purchases traded from 122.00-124.00 and 194.00-196.00, respectively.
The USDA is reporting live cash trades from 118.00 – 126.00 and dressed trades from 193.00 – 196.00 so far this week.
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 22, 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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