Walsh Trading Daily Insights
Commentary
October Lean Hogs is now the lead contract as its volume has surpassed the volume for the August contract. It opened unchanged from Monday’s settlement and made the session low at 89.15. Bulls took over and it rallied the rest of the session and made the high at the end of the day at 91.20. It settled at 91.025. The October contract is trading much below the August contract as the market believes there will be more hogs available for slaughter and demand will be softer, therefore it is trading below par, in my opinion. If Hogs can hold settlement, a test of resistance at 92.375 is possible. Resistance then comes in at 93.50. A breakdown from settlement could see support tested at 90.40 and then 88.325. The rising 200 DMA on the continuous chart looms just below at 88.10.
The Pork Cutout Index increased and is at 119.64 as of 7/19/2021.
The Lean Hog Index increased and is at 112.26 as of 7/16/2021.
Estimated Slaughter for Tuesday is 474,000, which is above last week’s 464,000 and even with last year. The estimated total for the week (so far) is 931,000, which is above last week’s 913,000 and below last year’s 943,000.
August Feeder Cattle continued its seesaw trading on Tuesday as Corn was up and therefore Feeders were down. Feeders opened lower, made the high at 156.95, then broke down to the early low at 155.225. Corn broke down and Feeders reversed course, nearly taking out the high before Corn turned around went higher and Feeders broke down to the session low at 155.175. It settled at 155.525. The price action, though lower, was muted, trading withing Monday’s range forming an inside candlestick. It The breakdown took price below support at 155.275, but settlement was above it. A breakdown from settlement could see support re-visited and a new low could see price test support at 154.25 and then 153.50. If feeders can hold settlement, a re-test of resistance at 156.075 is possible and then the resistance zone from 157.30 – 157.90is next. Feeders continue to react to the price action in corn, so be aware of what corn is doing and make your judgements accordingly, in my opinion.
The Feeder Cattle Index increased and is at 150.90 as of 7/19/2021.
October Live Cattle is now the lead contract as its volume has exceeded the August volume. In a sleepy session of trading, it opened lower, made the early high and then broke down to the session low at 124.325. It rebounded and traded to the session high at 125.475 before giving most of it back and then settling at 124.70. It formed and inside candlestick within Monday’s range, staying between support at 124.30 and resistance at 125.80. A breakdown from settlement could see price re-test support at 124.30 and then possibly work its way down to support at 122.825. If price can hold settlement, a re-test of resistance at 125.80 is possible. Resistance then comes in at 126.625.
Boxed beef cutouts were lower as choice cutouts declined 1.61 to 264.88 and select decreased 0.91 to 248.58. The choice/ select spread narrowed to 16.30 and the load count was 152.
Tuesday’s estimated slaughter is 120,000, which is below last week’s 121,000 and above last year’s 117,000. Monday’s slaughter was revised lower to 115,000. The estimated total for the week (so far) is 235,000, which is below last week’s 241,000 and above last year’s 232,000.
The USDA report LM_Ct131 states: Thus far for Tuesday in the Southern Plains negotiated cash trading has been at a standstill. In Nebraska negotiated cash trading was limited with very light demand. In the Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough purchases in any region for a market trend. Last week in the Southern Plains live purchases traded at 120.00. In Nebraska for the prior week live and dressed purchases traded from 123.00-125.00 and from 196.00 -202.00, respectively. In the Western Cornbelt for the previous week live and dressed purchases traded at 125.00 and from 196.00-197.00, respectively.
The USDA is indicating no cash trades this week for live cattle and 195.00 – 200.00 on a dressed basis (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 22, 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
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