Walsh Trading Daily Insights
Commentary
August Lean Hogs once again gap opened higher and rallied to the session high at 106.80. This time it failed to hold its gains as resistance at 106.85 was too difficult to overcome. Price broke down, closed the gap and traded to the session low at 104.95. The breakdown took price below the rising 100 DMA now at 105.26 and above support at 104.30. Settlement was at 105.10. Export sales are out before the Thursday open and it seems traders are apprehensive in front of the report. If price fails at settlement price, a test of support at 104.30 is possible. Support then comes in at 101.975, 100.075 and then 98.475. If price can hold settlement, a re-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 117.27 as of 7/13/2021.
The Lean Hog Index increased and is at 110.67 as of 7/12/2021.
Estimated Slaughter for Wednesday is 467,000, which is even with last week and below last year’s 468,000. The weekly estimated total (so far) is 1,380,000, which is above last week’s holiday slaughter of 940,000 and below last year’s 1,386,000.
August Feeder Cattle opened higher and made the session high at 159.325. With corn strong and rallying, feeders took it on the chin and broke down past the key support area 157.30 -157.90 and traded down to the low at 156.30, stopping just above support at 156.075. It settled at 156.95. A breakdown below the low could see price test support at 155.275. Support then comes in at 154.25 and then 153.50. If feeders can hold settlement, a re-test of resistance at the 157.30 – 157.90 zone is possible. Resistance then comes in at 160.625 and then 162.00.
The Feeder Cattle Index decreased and is at 152.99 as of 7/12/2021.
August Live Cattle opened higher, challenged resistance at 122.825 as it rallied to the session high at 122.60 and failed, breaking down to the session low at 121.175 and settling nearby at 121.25. The breakdown took price below the key level at 121.90 and puts support at 120.80 in traders’ cross hairs. 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. If price can overtake the 121.90 resistance level, a re-test of resistance at 122.825 is possible. Resistance then comes in at 124.30.
Boxed beef cutouts were lower as choice cutouts declined 0.46 to 272.88 and select decreased 2.99 to 253.75. The choice/ select spread widened to 19.13 and the load count was 136.
Wednesday’s estimated slaughter is 119,000, which is below last week’s 120,000 and above last year’s 118,000. The weekly estimated total (so far) is 360,000, which is above last week’s holiday slaughter of 247,000 and last year’s 350,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in Nebraska negotiated cash trading has been slow on light demand. Compared to the last reported market on Monday live purchases traded 2.00 lower at 123.00. Not enough dressed purchases for a market trend. Last week dressed purchases traded from 196.00- 202.00. So far Wednesday in the Southern Plains and Western Cornbelt negotiated cash trading has been mostly inactive with light demand. Not enough purchases for a market trend in these regions. In the Southern Plains on Tuesday live purchases traded mostly at 120.00. Last week in the Western Cornbelt 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 117.00 – 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
888.391.7894
Fax: 312.256.0109
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.