Livestock Report

Ben DiCostanzo General Commentary Leave a Comment

Walsh Trading Daily Insights

Commentary

July Lean Hogs opened lower and rallied to the session high at 123.60. This is the exact same price as Monday’s high and is called a Tweezer candlestick pattern. Tweezers are considered short-term reversal patterns and since it has occurred at the contract high, it would be a potential bearish reversal pattern. After making the high, price sank and plowed through the key level at 122.275 to the session low at 120.025. This is just above support at 119.90 and the rising 8 DMA (119.65), and price rallied to settle at 121.80. The high was just below resistance at 124.00. Settlement was once again below the 122.275 key level, which along with Monday’s shooting star candlestick and Tuesday’s Tweezer Top formation could fuel profit taking. A failure from settlement could see support re-tested at 119.90 and the rising 8 DMA. Support then comes in at the rising 13 DMA at 117.96. A rally above 122.275 could see price re-test the high and taking out the high would negate the Tweezer Top formation. Resistance is at 124.00, 125.50 and then 127.70.

The Pork Cutout Index increased and is at 131.16 as of 6/08/2021.

The Lean Hog Index increased and is at 116.51 as of 6/04/2021.

Estimated Slaughter for Tuesday is 485,000, which is above last week’s holiday 390,000 and last year’s slaughter of 444,000. Monday’s slaughter was revised down to 478,000. The weekly estimated slaughter (so far) is 963,000, which is above last week’s holiday week slaughter at 392,000 and last year’s 889,000.

August Feeder Cattle couldn’t take advantage of yesterday’s positive session as it is reacting to corn moves and corn rallied on Tuesday. The positive price action in corn sent Feeders lower and it traded past support at 148.40 to the low at 147.95. Once again Feeders bounced as corn couldn’t sustain the rally and pulled back off the high. It settled at 149.25. The high was 150.425. The result was an inside candlestick as it consolidated within Monday’s trading range. Settlement was below the key level at 149.975. If price can hold settlement, we could see a test of resistance at 149.975, the 50 DMA (150.09) and then 151.55. Resistance then comes in at 152.30. A failure from settlement could see price re-test support at 148.40 and 147.30. Support then comes in at 146.20. Price will likely continue to react to changes in the price of corn.

The Feeder Cattle Index decreased and is at 140.12 as of 6/07/2021.

August Live Cattle drifted on Tuesday, dipping below support at 117.825 to the low at 117.225 and making the high at 118.35, poking above the declining 8 DMA at 118.28. Settlement was right at support at 117825. A breakdown below 117.825 could see price test support at 116.55. Support then comes in at the rising 200 DMA at 115.35 and then 114.65. If price can hold settlement a test of resistance at the now declining 50 DMA (118.93) and 119.375 is possible. Resistance then comes in at the rising 100 DMA at 120.11 and then 120.80.

Boxed beef cutouts were mixed as choice cutouts increased 0.01 to 338.61 and select fell 2.99 to 306.18. The choice/ select spread widened to 32.43 and the load count was 108.

Tuesday’s estimated slaughter is 120,000, which is above last week’s 94,000 and last year’s 115,000. Monday’s slaughter was revised lower to 115,000. The weekly estimated slaughter (so far) is 235,000, which is above last week’s 96,000 and last year’s 227,000.

The USDA report LM_Ct131 states: Thus far for Tuesday in Nebraska and Western Cornbelt negotiated cash trading has been slow on moderate demand. In Nebraska, compared to last week, live and dressed purchases traded steady at 120.00 and from 190.00-191.00, respectively. In the Western Cornbelt a few live purchases traded from 120.00-121.00 and a few dressed purchases traded from 190.00-193.00. However, not enough for a full market trend. Last week live and dressed purchases traded at 120.00 and from 190.00- 191.00, respectively. So far for Tuesday in Kansas negotiated cash trading has been limited on light demand. A few live purchases traded at 119.00. However, not enough for a market trend. In the Texas Panhandle negotiated cash trading has been at a standstill. Last week in the Southern Plains live purchases traded at 120.00.

The USDA is indicating cash trades this week for live cattle from 119.00 – 121.00 and dressed trades at 188.00 – 193.00 (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.

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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

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