Perspective Commodity Snapshot Template
Walsh Trading Daily Insights
July Lean Hogs consolidated within Tuesday’s trading range forming an inside candlestick. It traded mostly in the lower end of the range, but couldn’t gain any downside steam to take advantage of the Tweezer Top 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. The pattern is still active however, and export sales are out before the open and could be the catalyst for some profit taking in the Hog complex. Wednesday’s range was 122.725 high and 120.175 low with settlement at 121.50. The low was once again just above support at the rising 8 DMA (120.225) and 119.90. The high was just above resistance at 122.225. Settlement was once again below the 122.275 key level, which is weighing on the price action. 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 118.66. 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 132.87 as of 6/08/2021.
The Lean Hog Index increased and is at 117.77 as of 6/07/2021.
Estimated Slaughter for Wednesday is 485,000, which is above last week’s 439,000 and last year’s 448,000. The weekly estimated slaughter (so far) is 1,448,000, which is above last week’s holiday week slaughter at 831,000 and last year’s 1,337,000.
August Feeder Cattle rallied past resistance early in the trading session to the high at 150.90 as corn prices were weak. The positive price action didn’t last however, as corn recovered and it sent Feeders lower and it traded past support at 148.40 to the low at 147.50. Once again Feeders bounced off of the 147.30 support level and it settled at 148.275. The result was an outside candlestick with a bearish lean (in my opinion) as it traded above the Tuesday high and below its low. Settlement was below the key level at 148.40. If price can hold settlement, we could see a test of resistance at 148.40, 149.975, the 50 DMA (150.02) and then 151.55. Resistance then comes in at 152.30. A failure from settlement could see price re-test support at 147.30. Support then comes in at 146.20 and 145.05. Price will likely continue to react to changes in the price of corn.
The Feeder Cattle Index ticked lower and is at 140.04 as of 6/08/2021.
August Live Cattle opened higher, traded below support at 117.825 to the low at 117.35, reversed course and rallied to the high at 118.575 early in the trading session then drifted the rest of the session. It settled at 118.275. It was a quiet session once again as the cash market remains in a trading range and has not been able to show any kind of strength, so futures drift and respond to potential disruptions in slaughter and drift…..Price settled above the declining 8 DMA at 118.15 and the key level at 117.825. If price can hold settlement a test of resistance at the now declining 50 DMA (118.85) and 119.375 is possible. Resistance then comes in at the rising 100 DMA at 120.12 and then 120.80. A breakdown below 117.825 could see price test support at 116.55. Support then comes in at the rising 200 DMA at 115.39 and then 114.65.
Boxed beef cutouts increased as choice cutouts ticked up 0.04 to 338.65 and select increased 1.69 to 307.87. The choice/ select spread narrowed to 30.78 and the load count was 102.
Tuesday’s estimated slaughter is 120,000, which is above last week’s 105,000 and last year’s 116,000. The weekly estimated slaughter (so far) is 355,000, which is above last week’s 201,000 and last year’s 343,000.
The USDA report LM_Ct131 states: So far for Wednesday in the Southern Plains, Nebraska and Western Cornbelt negotiated cash trading has been limited on moderate demand. In the Texas Panhandle, compared to last week, live purchases traded steady to 0.50 lower from 119.50-120.00. In Kansas, compared to the prior week, live purchases traded mostly steady at 120.00. In Nebraska a few live purchases traded from 120.00 -121.00. However, not enough live or dressed purchases for a full market trend. Tuesday was the last reported market with live and dressed purchases at 120.00 and from 190.0-191.00, respectively. In the Western Cornbelt not enough purchases for a market trend. Tuesday was the last reported market with live and dressed purchases at 120.00 and from 190.0-191.00, respectively.
The USDA is indicating cash trades this week for live cattle from 116.00 – 122.50 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.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Senior Market Strategist
Walsh Trading, Inc.
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.