Walsh Trading Daily Insights
Commentary
June Lean Hogs continued higher, making another new high for the up move at 114.575. It settled near the high at 114.425. The high and settlement was just below the 114.675 resistance level and the price action formed a hanging man candlestick. This could potentially indicate a short-term top if price fails below the 112.55 session low. The low tested the key level at 112.975 and the MACD is not rising fast enough to overtake its prior highs. Taking out support and trading below the hanging man candle low could lead to divergence and a sell signal in the MACD (if the MACD has a downward cross). The export sales report comes out Thursday morning before the open and futures are now strong compared to the cash market. Any implied weakness in the export sales report (that is if China watchers determine they will be making less purchases going forward) could lead to some profit taking in Hogs. Resistance remains at 114.675. It then comes in at 115.925. A failure from the Wednesday low could see support tested at 111.675. Support then comes in at the gap created from Friday’s high at 109.725 and Monday’s low at 110.875.
The Pork Cutout Index increased and is at 109.95 as of 5/04/2021.
The Lean Hog Index increased and is at 107.37 as of 5/03/2021.
Estimated Slaughter for Wednesday is 485,000 which is above last week’s 483,000 and last year’s 315,000. The estimated weekly total (so far) is 1,450,000, which is below last week’s 1,452,000 and above last year’s 897,000.
August Feeder Cattle once again tested the 100 DMA (143.15) and support at 142.40. It made the session low at 142.225 early in the trading session and was able to laugh in the face of higher corn prices as it rallied the rest of the session to the high at 145.70. It settled at 145.225, which is above resistance at 145.05. Traders seemed unwilling to pressure Feeders any further to the downside with the flattening 200 DMA nearby at 141.33. If price can hold above settlement, we could see a test of resistance at 146.20. Resistance then comes in at 147.30. A failure from 145.05 could see price re-test support at 144.25, 143.50 and then the 100 DMA. Support then comes in at 142.40, the 200 DMA and 140.775.
The Feeder Cattle Index decreased and is at 132.55 as of 5/04/2021.
June Live Cattle consolidated within Tuesday’s trading range, climbing back above the 200 DMA (114.13) in the process. It made the session high at 114.55, the low at 113.10 and settlement at 114.425. The high is just below resistance at 114.65. Cash has traded on a live basis from 117.00 to 119.00, which steadied the price action in futures. If price can rally above 114.65, a test of resistance at 116.55 is possible. Resistance then comes in at 117.825. A failure below the 200 DMA could see price re-test support at 112.35. Support then comes in at 110.80.
Boxed beef cutouts surged as choice cutouts rose 3.56 to 304.78 and select increased 2.27 to 286.18. The choice/ select spread widened to 18.60 and the load count was 121.
Wednesday’s estimated slaughter is 120,000, which is even with last week and above last year’s 87,000. The weekly estimated total (so far) is 355,000, which is below last week’s 358,000 and above last year’s 250,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited on light demand in the Southern Plains, Nebraska, and the Western Cornbelt. Not enough purchases for a full market trend. Negotiated cash trading has been at a standstill in Colorado. Last week in the Southern Plains live purchases traded from 118.00-119.00. On Tuesday in Nebraska live purchases traded at 118.00 and dressed purchases traded from 188.00-190.00. In Colorado last week, live purchases traded from 119.00-120.00. In the Western Cornbelt on Tuesday live purchases traded from 118.00-119.00 and dressed purchases traded from 187.00-190.00.
The USDA is indicating cash trades this week for live cattle from 117.00 – 120.00 and dressed trades from 187.00-192.00.
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, May 6, 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.