Walsh Trading Daily Insights
Commentary
June Lean Hogs opened lower, traded past resistance at 112.975 to the session high at 113.125 and then broke down to the low at 110.25. The break down to the low filled much of the gap from 110.875 to 109.725. It was able to bounce and it settled at 111.175. The gap has shrunk and it now is from 110.25 to 109.725. Settlement was below support at 111.675. This will key price action on Wednesday, in my opinion. A rally past 111.675 could see resistance revisited at 112.975. Resistance then comes in at 114.675. A failure from settlement could see support tested at the gap. If the gap fails on a second attempt, we could see support tested at the rising 21 DMA, now at 108.29. Support then comes in at 107.925.
The Pork Cutout Index increased and is at 112.64 as of 5/10/2021.
The Lean Hog Index increased and is at 110.10 as of 5/07/2021.
Estimated Slaughter for Tuesday is 485,000 which is below last week’s 487,000 and last year’s 371,000. The estimated weekly total is (so far) 968,000, which is above last week’s 965,000 and last year’s 736,000.
August Feeder Cattle held its own as corn recovered from yesterday’s sell off. It opened lower and traded to the session low at 147.55. It held that important (in my opinion) 147.30 support level and rallied to the session high at 149.625. It settled at 148.85. Settlement was once again above resistance at 148.40. the high was just below resistance at 149.975. A rally above 149.975 could see resistance at 151.55 tested. Resistance then comes in at 152.30 and 153.50. A failure from 148.40 could see price re-test support at 147.30. Support then comes in at 146.20 and then 145.05.
The Feeder Cattle Index decreased and is at 130.15 as of 5/07/2021. (No update for today as I write this article.)
June Live Cattle gap opened higher and traded to the session high at 118.90. It failed from here and broke down to the session low at 117.85, closing the gap in the process. The low was just above the 117.825 support level and this provided a lift as price ran up to the high forming an intra-day double top. It settled at 118.625 and is above support at 117.825. A follow-through to the upside could see price test converging resistance at the rising 100 DMA (119.27), the flattening 50 DMA (119.41) 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 breakdown from settlement could see support revisited at 117.825. Support then comes in at 116.55 and then 114.65.
Boxed beef cutouts surged as choice cutouts rose 3.26 to 312.37 and select increased 2.58 to 296.34. The choice/ select spread widened to 16.03 and the load count was 106.
Tuesday’s estimated slaughter is 118,000, which is below last week’s 121,000 and above last year’s 94,000. Monday’s slaughter was revised lower to 112,000. The weekly estimated total (so far) is 230,000
The USDA report LM_Ct131 states: So far for Tuesday in the Southern Plains negotiated cash trading has been mostly inactive on light demand. In Nebraska and Western Cornbelt negotiated cash trading has been limited on light to moderate demand. In Nebraska a few dressed purchases traded at 191.00. In the Western Cornbelt a few live purchases traded at 120.00. However, not enough purchases in any of these regions for a full market trend. In Colorado negotiated cash trading has been at a standstill. Last week in the Texas Panhandle live purchases traded from 117.50-119.00. 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. Last week in the Western Cornbelt live and dressed purchases traded from 117.00-119.00 and from 187.00-190.00, respectively. In Colorado for two weeks ago live purchases traded from 119.00-120.00.
The USDA is indicating cash trades this week for live cattle from 119.00 – 122.00 and dressed trades from 189.00 – 192.50.
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
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.