Perspective Commodity Snapshot Template
Walsh Trading Daily Insights
Commentary
August Lean Hogs opened unchanged, made the session low just above support (98.475) at 98.50 and then rallied to the session high at 101.80, stalling just below resistance at 101.975. It pulled back and settled at 99.775. Settlement was below the key level at 100.075, keeping the pressure on price. If price fails from settlement, a re-test of support at 98.475 is possible. Support then comes in at 97.30 and then 95.30. If price can re-take 100.075, resistance could be re-tested at 101.975 and then the rising 100 DMA at 102.86. Resistance then comes in at 104.30.
The Pork Cutout Index declined and is at 113.35 as of 6/24/2021.
The Lean Hog Index decreased and is at 117.62 as of 6/23/2021.
Estimated Slaughter for Friday is 451,000, which is below last week’s 464,000 and last year’s 468,000. Saturday’s slaughter is expected to be 25,000, which is lower than last week’s 60,000 and last year’s 308,000. The weekly estimated total is expected to be 2,368,000, which is lower than last week’s 2,437,000 and last year’s 2,626,000.
August Feeder Cattle opened lower, made the session low at 156.475 and rallied the remainder of the session, making the high at 159.675 and settling strong at 159.55. The rally took price above strong resistance (in my opinion), from 157.30 to 157.92 as weak corn prices spurred bulls into a buying frenzy. If price can hold settlement, resistance could be tested at the recent high at 160.15, 160.625 and then a breakout could see 162.00 tested. A failure from settlement could see price re-test support at the 157.30 to 157.92 area. A breakdown below support could pressure Feeders down to 156.075 and then 155.275.
The Feeder Cattle Index increased and is at 145.44 as of 6/22/2021. Index prices have not updated.
August Live Cattle consolidated within Thursday’s range with the high at 122.95 and the low at 121.50. Settlement was at 122.80. Settlement was just below resistance at 122.825. It was a lethargic trading session and a very quiet week so far in the cash market with sale numbers down for the week (so far) at higher prices. If price can rally past resistance (122.825), 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.
United States Cattle on Feed Up Slightly
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.7 million head on June 1, 2021. The inventory was slightly above June 1, 2020. This is the second highest June 1 inventory since the series began in 1996.
Placements in feedlots during May totaled 1.91 million head, 7 percent below 2020. Net placements were 1.84 million head. During May, placements of cattle and calves weighing less than 600 pounds were 355,000 head, 600-699 pounds were 255,000 head, 700-799 pounds were 470,000 head, 800-899 pounds were 501,000 head, 900-999 pounds were 235,000 head, and 1,000 pounds and greater were 95,000 head.
Marketings of fed cattle during May totaled 1.87 million head, 23 percent above 2020. Other disappearance totaled 67,000 head during May, 2 percent above 2020.
Boxed beef cutouts were mixed as choice cutouts declined 2.86 to 304.56 and select ticked higher 0.04 to 276.18. The choice/ select spread narrowed to 28.38 and the load count was 93.
Friday’s estimated slaughter is 116,000, which is lower than last week’s 117,000 and last year’s 118,000. Saturday’s slaughter is expected to be 70,000, which is above last week’s 69,000 and below last year’s 78,000. The weekly estimated total is estimated to be 661,000, which is below last week’s 663,000 and last year’s 665,000.
The USDA report LM_Ct131 states: So far for Friday in the Southern Plains, Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive with light demand. Not enough purchases in any region for a 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 118.00 – 126.50 and dressed trades at 195.00 – 203.00 (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, July 1, 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.
Perspective Commodity Snapshot Template
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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