Walsh Trading Daily Insights
Commentary
August Lean Hogs gap opened higher and rallied to resistance at 104.30 making the session high just above it at 104.375. It settled just below resistance at 104.075. The low was at 102.10. The African swine fever disease is once again raging in China, killing large numbers of pigs in Sichuan Province in Southern China. It is also infecting farms in Poland and continues to lay waste to farms in the Philippines. With the PRRS disease still working its way in the US, Hog numbers will continue to be under pressure as demand for pork is strong and the supply continues to be stressed, in my opinion. I think pork and hog prices will remain firm until something gives on the disease front. If price fails at settlement price, a re-test of support at 101.975 is possible. Support then comes in at 100.075 and then 98.475. If price can rally past resistance and the rising 100 DMA now at 104.84, a test resistance at the declining 21 DMA (105.72) is possible. Resistance then comes in at 106.85.
The Pork Cutout Index increased and is at 115.53 as of 7/09/2021.
The Lean Hog Index ticked lower and is at 109.74 as of 7/08/2021.
Estimated Slaughter for Monday is 457,000, which is above last week’s holiday slaughter of 7,000 and last year’s 449,000.
August Feeder Cattle declined to test support at 157.30, making the low just above it at 157.60. It didn’t like the rally in corn prices as it has been sensitive to the movements in corn due to the high price levels corn is at. It is consolidating at the critical (in my opinion) 157.30 – 157.90 key zone. If corn continues to work its way higher, we could see feeders on its heels. A breakdown below 157.30 could see price test support at 156.075 and then 155.275. If feeders can hold settlement, and corn breaks down, a test of resistance at 162.00 is possible. Resistance then comes in at 163.50.
The Feeder Cattle Index increased and is at 153.82 as of 7/09/2021.
August Live Cattle traded in a narrow range on Monday, making an inside candle within Friday’s breakdown candle. The Monday range was 120.35 high and 119.00 low. It settled at 119.825. If price can hold settlement, a test of resistance at 120.80 is possible. Resistance then comes in at 121.90. A breakdown from settlement could see price re-test support at 119.375 and then possibly work its way down to support at 117.825.
Boxed beef cutouts were mixed as choice cutouts fell 3.59 to 275.00 and select increased 1.36 to 258.77. The choice/ select spread narrowed to 16.23 and the load count was 123.
Monday’s estimated slaughter is 120,000, which is above last week’s holiday slaughter of 8,000 and last year’s 115,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been slow on light demand in Nebraska with early live purchases steady to 2.00 higher compared to last week at 125.00. Not enough dressed purchases for a full market trend. Last week in Nebraska dressed purchases traded from 196.00- 202.00. Negotiated cash trading in the Western Cornbelt has been mostly inactive on very light demand. Not enough purchases for a full market trend. Negotiated cash trading in all other major feeding regions has been at a standstill. Last week in the Texas Panhandle live purchases traded at 120.00. In Kansas last week, live purchases traded from 119.00-120.00. In the Western Cornbelt last week, live and dressed purchases traded from 124.00-126.00 and from 196.00-202.00, respectively.
The USDA is indicating cash trades this week for live cattle at 125.00 and nothing for dressed trades (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 15, 2021 at 2:00 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
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Fax: 312.256.0109
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