Walsh Trading Daily Insights
October Lean Hogs opened lower, rallied to the session high at 91.725 and turned south for the rest of the session. It traded down to 89.975 and settled at 90.125. The pullback took price below support at 90.40 as traders reacted to the cutout values declining in the morning and in front of the export sales report due out before Thursdays open. A failure from settlement could see support tested at the rising 200 DMA now at 89.46 and then 88.325. If price can retake resistance at 90.40 a re-test of the Wednesday high is possible. Resistance then comes in at 92.375.
The Pork Cutout Index increased and is at 125.79 as of 8/03/2021.
The Lean Hog Index decreased and is at 111.59 as of 8/02/2021.
Estimated Slaughter for Wednesday is 472,000, which is above last week’s 465,000 and below last year’s 478,000. Tuesday’s slaughter was revised lower to 469,000. The estimated total for the week (so far) 1,349,000, which is below last week’s 1,402,000 and last year’s 1,369,000.
September Feeder Cattle opened higher and pulled back to trade to the session low at 162.10. This is just above the 162.00 support level and price reversed course and rallied the rest of the day to the session high at 163.65. This was another test of resistance at 163.50 and once again it proved to be strong resistance as it pulled back to settle at 162.875 and broke down further in the after-settlement period. Feeder Cattle is coiling between support at 162.00 and resistance at 163.50. It needs to settle above resistance or below support to key the next directional trade, in my opinion. A pullback below 162.00 could see price re-visit support at 160.625. Support then comes in from 157.94 – 157.30. If feeders can hold settlement, a re-test of resistance at 163.50 and the 163.825 high is possible. Resistance then comes in at 165.775.
October Live Cattle opened higher and traded to the session low at 127.875. It reversed course and rallied the rest of the session to the high at 129.50. It pulled back and settled at 128.975 and also traded down in the after-settlement session. Traders continue to hope for a surge in cash prices as cutout prices continue to soar taking futures above resistance at 128.10 once again. If price can hold settlement, a test of the high at 129.875 is possible. Resistance is next at 130.45. A breakdown from settlement could see price test support at 126.625. Support then comes in at 125.80.
Boxed beef cutouts were higher as choice cutouts surged 3.50 to 289.34 and select surged 3.66 to 271.15. The choice/ select spread narrowed to 18.19 and the load count was 146.
Wednesday’s estimated slaughter is 121,000, which is above last week’s 120,000 and last year’s 118,000. The estimated total for the week is 359,000, which is above last week’s 358,000 and last year’s 346,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been slow on light to moderate demand in all major feeding regions. In the Texas Panhandle, a few live purchases have traded at 122.00, however not enough for a full market trend. The last reported live market was last week with purchases at 120.00. In Kansas live purchases have traded 1.00 higher compared to last week at 121.00. In Nebraska live purchases have traded steady to 1.00 higher at 125.00 compared to the latest reported market on Tuesday and dressed purchases have traded 2.00 higher at 198.00 compared to last week. In the Western Cornbelt live purchases have traded steady at 125.00 compared to Tuesday, and a few dressed purchases have traded 198.00, however not enough dressed purchases for a full market trend. Last week in the Western Cornbelt dressed purchases traded from 195.00-201.00.
The USDA is indicating cash trades this week for live cattle at 117.00 – 125.00 and 196.00 – 198.00 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, August 5, 2021 at3:00 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.**
Senior Market Strategist
Walsh Trading, Inc.
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