Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, made the session high at 92.375 and crashed …. ending the session with a limit down move and settling limit down on the session. Settlement was at 89.525 and Thursday’s session will have expanded limits of 4.5 handles. The limit sown move took price down to 89.525, settling below the 90.40 support level. If Hogs can hold settlement, consolidation within the Wednesday range is possible. A continuation lower could see support tested at the rising 200 DMA now at 88.925 and then 88.325. Support then comes in at 87.10. Export Sales are out before the open on Thursday and will have an impact on the price action.
The Pork Cutout Index increased and is at 122.69 as of 7/27/2021.
The Lean Hog Index decreased and is at 112.05 as of 7/26/2021.
Estimated Slaughter for Wednesday is 471,000, which is below last week’s 474,000 and last year’s 476,000. The estimated total for the week (so far) is 1,408,000, which is above last week’s 1,400,000 and last year’s 1,406,000.
September Feeder Cattle has replaced the August contract as the lead contract. Its volume is now higher than the August volume. It opened lower and made an early high and then broke down to the session low at 163.15. Buyers came back and took price up to the session high at 164.475. The rally wasn’t sustained and price broke down and breached the key level at 163.50, settling below it at 163.45. The cash market continues its remarkable run higher in the face of higher corn prices, as demand from feedlots remain surprisingly strong. A breakdown from settlement could see support tested at 162.00. Support then comes in at 160.625. If feeders can hold settlement, a re-test of resistance at 165.775 is possible.
The Feeder Cattle Index increased and is at 154.36 as of 7/27/2021.
October Live Cattle consolidated within Tuesday’s range, making the high at 129.25 and the low at 128.175. It settled at 128.525. Cash is struggling as packers wait and hope for a futures break down so they can justify their low bids for cattle. They were able to buy some cattle at bargain basement prices today as the cash range extended lower to 116.00. Cutout prices continue to firm as packers win on both sides of the beef trade. Settlement was above support at 128.10. If settlement holds, we could see a test of the Tuesday high and if we can take that out… resistance at 130.45 is next. A breakdown from 128.10 could see price test support at 126.625.
Boxed beef cutouts were higher as choice cutouts surged 3.43 to 273.16 and select increased 2.18 to 256.12. The choice/ select spread widened to 17.04 and the load count was 136.
Wednesday’s estimated slaughter is 120,000, which is above last week’s 117,000 and last year’s 119,000. The estimated total for the week (so far) is 358,000, which is above last week’s 349,000 and last year’s 355,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited on light demand in all major feeding regions. Not enough purchases in any region for a full market trend. Last week in the Southern Plains live purchases traded at 119.00. In Nebraska last week live and dressed purchases traded from 120.00-123.00 and at 195.00, respectively. In the Western Cornbelt last week live and dressed purchases traded from 120.00-124.00 and from 195.00-202.00, respectively.
The USDA is indicating cash trades this week for live cattle from 116.00 – 125.00 and 195.00 – 201.00 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 29, 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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