Walsh Trading Daily Insights
Commentary
August Lean Hogs is the lead contract as its volume has exceeded the July contract. It continued its fall from grace, trading limit down to 100.70 for the session low and settling at 100.725. The collapse took price below support at the 100 DMA (102.40) and 101.975 and was stopped just above support at 100.075 because of the price limit. July did settle limit down so limits will be expanded to 4.5 handles. The high was at 103.075. Settling below the 100 DMA if not reversed quickly could see price move towards the rising 200 DMA, now at 84.63. Support is at 100.075, 98.475 and then 97.30. If price can hold settlement, resistance could be tested at 101.975, the rising 100 DMA and then 104.30. Pork prices are being pressured and traders fear cash markets will follow the Chinese market and collapse as more hogs are coming to market going forward and processing hogs are being curtailed due to line speed issues, in my opinion.
The Pork Cutout Index fell land is at 118.00 as of 6/22/2021.
The Lean Hog Index ticked higher and is at 120.73 as of 6/21/2021.
Estimated Slaughter for Wednesday is 476,000, which is below last week’s 477,000 and above last year’s 471,000. The weekly estimated total (so far) is 1,419,000, which is lower than last week’s 1,435,000 and above last year’s 1,381,000.
August Feeder Cattle consolidated within Tuesday’s range, making the high at 159.35, the low at 155.425 and settling near the low at 155.70. Settlement was above support at 155.275. If price can hold settlement, resistance could be re-tested at 156.075, and then the 157.30 to 157.92 area. A failure from 155.275 could see price re-test support at 154.25 and 153.50. A breakdown below 153.50 could pressure Feeders down to 152.30 and 151.55.
The Feeder Cattle Index increased and is at 145.44 as of 6/22/2021.
August Live Cattle also consolidated within Tuesday’s range with the high at 124.45 and the low at 122.175. Settlement was at 122.875. Settlement was just above support at 122.825. If price can hold settlement, a re-test of resistance at 124.30 is possible. A breakdown from settlement could see price test support at 121.90 and then 120.80. Support then comes in at 119.375.
Boxed beef cutouts collapsed as choice cutouts dropped 3.70 to 312.05 and select fell 4.34 to 275.41. The choice/ select spread widened to 36.64 and the load count was 119.
Wednesday’s estimated slaughter is 117,000, which is lower than last week’s 120,000 and last year’s 117,000. The weekly estimated total (so far) is 356,000, which is below last week’s 357,000 and above last year’s 351,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in Nebraska and Western Cornbelt negotiated cash trading has been limited on light to moderate demand. In Nebraska a few live and dressed purchases traded at 126.00 and 197.00, respectively. So far for Wednesday in the Southern Plains negotiated cash trading has been mostly inactive on light demand. However, not enough purchases in any region for a full market trend. For the prior week in Nebraska and Western Cornbelt live and dressed purchases traded at 124.00 and 195.00, respectively. Last week in the Southern Plains live purchases traded at 122.00.
The USDA is indicating cash trades this week for live cattle 120.00 – 126.50 and dressed trades at 195.00 – 202.00 (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 24, 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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