Walsh Trading Daily Insights
Commentary
August Lean Hogs gap opened higher for the second day in a row, breaking out above resistance at 104.30 and rallying to the session high at 106.175. It settled at 105.925. The low was at 104.475. Pork prices and cash hog prices have shown strength so far this week and futures are reacting to the strength. If price fails at settlement price, a test of support at the rising 100 DMA at 105.05 and then 104.30 is possible. Support then comes in at 101.975, 100.075 and then 98.475. If price can hold settlement, a test resistance at 106.85 is possible. Resistance then comes in at 107.925. There are gaps above and below the market. Above the market has a gap from the June 21st high at 107.20 and the low from June 18 at 108.50. Below the market are gaps from the July 12th high at 104.375 to the July 13 low at 104.475 and from the July 9th high at 101.975 to the July 12th low at 102.10.
The Pork Cutout Index increased and is at 116.02 as of 7/12/2021.
The Lean Hog Index increased and is at 110.10 as of 7/09/2021.
Estimated Slaughter for Tuesday is 464,000, which is below last week’s 466,000 and last year’s 469,000. Monday’s slaughter was revised lower to 449,000. The weekly estimated total ( so far) is 913,000, which is above last week’s holiday slaughter of 473,000 and below last year’s 918,000.
August Feeder Cattle was able to hold the line at the 157.30 support level making the session low right at support. It rallied from support to the high at 159.375. It settled at 158.825. It formed an outside candlestick after Monday’s inside candle. This strength came even as corn was higher on the session. It is still 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 failure from settlement could see price revisit the 157.30 – 157.90 support zone. A breakdown below 157.30 could see price test support at 156.075 and then 155.275. If feeders can hold settlement, a test of resistance at 160.625 and then 162.00 is possible. Resistance then comes in at 163.50.
The Feeder Cattle Index decreased and is at 152.99 as of 7/12/2021.
August Live Cattle opened higher, made the session low at 119.825 and rallied to the session high at 122.45. It settled at 121.75. The rally took price past resistance at 121.90, but it couldn’t sustain it and settled below resistance. If price can overtake the 121.90 resistance level, a test of resistance at 122.825 is possible. Resistance then comes in at 124.30. A breakdown from settlement could see price re-test support at 120.80 and then possibly work its way down to support at 119.375.
Boxed beef cutouts were lower as choice cutouts declined 1.66 to 273.34 and select decreased 2.03 to 256.74. The choice/ select spread widened to 16.60 and the load count was 178.
Tuesday’s estimated slaughter is 121,000, which is above last week’s 119,000 and last year’s 117,000. The weekly estimated total (so far) is 241,000, which is above last week’s holiday slaughter of 127,000 and last year’s 232,000.
The USDA report LM_Ct131 states: Thus far for Tuesday in the Texas Panhandle negotiated cash trading has been limited on light demand. Compared to last week early live purchases traded steady at 120.00. In Kansas negotiated cash trading was slow on moderate demand. Compared to the prior week early live purchases traded steady to 1.00 higher mostly at 120.00. So far for Tuesday in Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in these regions for a market trend. In Nebraska on Monday live purchases traded at 125.00. Last week dressed purchases traded from 196.00-202.00. 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 119.00 – 125.00 and 191.00 – 202.00 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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