Walsh Trading Daily Insights
Commentary
July Lean Hogs broke out to a new high and settlement on Friday, reaching 121.45 and settling above the 119.90 resistance level at 120.60. The session low was above the rising 8 DMA (118.45) at 118.50. The breakout to the new high puts’ resistance at 122.275 in traders’ crosshairs, in my opinion. A breakout above the high could see price test resistance at 122.275 and then 124.00. A failure from the 8 DMA could see support tested at 117.20. Cutouts remain strong, while export sales pulled back to 24,300MT and actual exports to 36,400MT.
The Pork Cutout Index increased and is at 128.19 as of 6/03/2021.
The Lean Hog Index increased and is at 114.05 as of 6/02/2021.
Estimated Slaughter for Friday is 478,000, which is above last week’s 425,000 and last year’s slaughter of 443,000. Saturday slaughter is expected to be 196,000, which is above last week’s 22,000 and below last year’s 318,000. The estimated weekly total is expected to be 1,975,000 which is below last week’s 2,378,000 and last year’s 2,453,000.
August Feeder Cattle collapsed on Friday, trading down past support at 149.975 to the session low at 149.20. It settled at 149.925, which is below support. This is a negative for the market in my opinion. This could lead to a re-test of the 145.10 low, in my opinion. A failure from settlement could see price test support at 148.40, 147.30 and then 146.20. A rally the rising 50 DMA (15007) could see resistance at 151.55, 152.30 and 153.50 re-visited. Corn prices surged on Friday, reminding traders of the high feed costs for raising cattle.
The Feeder Cattle Index increased and is at 136.65 as of 6/02/2021. (no update yet)
August Live Cattle drifted lower on Friday, trading down to support at 117.825 and making the low just above it at 117.875. The high was at 118.95 and settlement was at 118.075. A breakdown below 117.825 could see price test support at 116.55. Support then comes in at the rising 200 DMA at 115.27 and then 114.65. If price can hold settlement a test of resistance at the 50 DAM (119.07) and 119.375 is possible. Resistance then comes in at the 100 DMA at 120.00 and then 120.80.
Boxed beef cutouts fell as choice cutouts declined 1.57 to 338.98 and select decreased 1.43 to 311.73. The choice/ select spread narrowed to 27.25 and the load count was 97.
Friday’s estimated slaughter is 119,000, which is above last week’s 117,000 and last year’s 113,000. Saturday slaughter is expected to be 98,000, which is above last week’s 34,000 and last year’s 62,000. The estimated weekly total is expected to be 538,000, which is below last week’s 629,000 and last year’s 628,000.
The USDA report LM_Ct131 states: So far for Friday in the Texas Panhandle and Kansas negotiated cash trading was limited with light demand. In the Texas Panhandle, compared to the last market on Wednesday, live purchases traded steady at 120.00. In Kansas, compared to the last market on Thursday, live purchases traded steady to 1.00 higher at 120.00. Thus far for Friday in Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in these regions for a full market trend. In both regions on Thursday live purchases traded at 120.00. In both regions on Wednesday dressed purchases traded from 190.00-191.00.
The USDA is indicating cash trades this week for live cattle from 118.00 – 121.00 and dressed trades at 188.00 – 194.00 (so far).
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, June 10, 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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