Walsh Trading Daily Insights
Commentary
June Lean Hogs gap opened lower, closed the gap, making the session high at 112.675 and the then broke down to the low at 111.075. It then consolidated the rest of the session and settled at 112.10. The low tested support at 111.675 and approached the high of the gap at 110.875 to 109.25. The recovery off the low created a hammer candlestick, and could lead to a recovery in price if futures can rally above the Monday high on Tuesday. Resistance is at 112.975 and then 114.675. A failure from 111.675 could see support tested at the gap. Support then comes in at 107.925.
The Pork Cutout Index increased and is at 112.37 as of 5/07/2021.
The Lean Hog Index increased and is at 109.22 as of 5/06/2021.
Estimated Slaughter for Monday is 483,000 which is above last week’s 478,000 and last year’s 365,000.
August Feeder Cattle surged as corn weakness sent Feeder Cattle traders into a buying frenzy taking price past resistance at 148.40 to the session high at 149.10. It settled at 148.70. The excitement took price nearly up its 5-handle limit with corn prices falling over 20 cents as traders took profits in front of the Wednesday grain reports. Settlement was above resistance which puts 149.975 resistance in traders cross-hairs. A rally above 149.975, could see resistance at 151.55 re-visited. Resistance then comes in at 152.30. A failure from 148.40 could see price re-test support at 147.30, 146.20 and then 145.05.
The Feeder Cattle Index decreased and is at 130.15 as of 5/07/2021.
June Live Cattle also celebrated the corn break down in price. It rallied over 2 handles to the session high at 118.40. It settled at 118.225 and is above resistance at 117.825. A follow-through to the upside could see price test converging resistance at the rising 100 DMA (119.21), the flattening 50 DMA (119.43) and the 119.375 resistance level. This could be strong resistance or a spring board to higher levels if penetrated. If price can rally above this area, a test of resistance at 120.80 is possible. Resistance then comes in at 121.90. A failure below 117.825 could see price re-test support at 116.55. Support then comes in at 114.65.
Boxed beef cutouts surged as choice cutouts rose 3.23 to 309.11 and select increased 3.49 to 293.76. The choice/ select spread narrowed to 15.35 and the load count was 71.
Monday’s estimated slaughter is 119,000, which is above last week’s 114,000 and last year’s 89,000.
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 Texas Panhandle live purchases traded from 117.500-119.00. In Kansas live purchases traded at 119.00. For the prior week in Nebraska live and dressed purchases traded at 118.00 and from 188.00-190.00, respectively. In Colorado for two weeks ago live purchases traded from 119.00-120.00. Last week in the Western Cornbelt live and dressed purchases traded from 117.00-119.00 and from 187.00- 190.00, respectively.
The USDA is indicating cash trades this week for live cattle at 120.00 and dressed trades at 189.00.
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 13, 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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