Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, made the session high at 88.575 and then grinded lower to the session low at 87.55. It settled at 87.90. After yesterday’s strong close, the afternoon cutout prices tanked and cash prices were lower, putting the brakes on the rally in Hog futures. The up and down movements in these prices are causing confusion for traders as they try to discern future direction in the market. The breakdown took price below support at 88.325 and above the upward sloping trendline at 87.45, keeping the price action within Monday’s range creating an inside candlestick. If price can stay above the trendline at 87.65 for Wednesday, price could test the Tuesday high and a rally past the high could see resistance at the sharply declining 21 DMA now at 89.03 tested. There is a gap above from 89.70 to 89.975, the rising 200 DMA is at 90.30 and then there is resistance at 90.40. A breakdown from the low could see support tested at the gap from 86.875 to 87.25. There is also support within the gap at 87.10.
The Pork Cutout Index decreased and is at 122.36 as of 8/16/2021.
The Lean Hog Index decreased and is at 109.67 as of 8/13/2021.
Estimated Slaughter for Tuesday is 478,000, which is above last week’s 472,000 and below last year’s 481,000. The estimated total for the week (so far) is 955,000, which is higher than last week’s 928,000 ad below last year’s 966,000.
September Feeder Cattle opened at support at 162.00 and grinded lower, making the high at 162.15 and the low at 160.75. It settled nearby at 160.925. The low is just above support at 160.625. Feeder Cattle once again couldn’t rally with weaker corn as the cash index has been heading lower. A breakdown below 160.625 at the rising 50 DMA now at 158.54. If price can’t bounce off the 50 DMA, a return to support at the 157.92 – 157.30 zone. If feeders can hold support at 160.625 a test of resistance at 162.00 is possible. Resistance then comes in at 163.50.
The Feeder Cattle Index decreased and is at 154.91 as of 8/16/2021.
October Live Cattle opened lower and traded up to the session high at 129.30. It failed from here breaking down the rest of the session to the low at 128.075. It settled nearby at 128.125. The breakdown took price back down to support at 128.10, keeping the cattle market in consolidation mode. The price action resulted in an inside candlestick with settlement just above support. If support holds, cattle could revisit the Tuesday high. A break out above the high could see price test the July 27th high at 129.875 and resistance at 130.45 is next. A failure below support at 128.10 could see price breakdown to support at 126.625. Support then comes in at 125.80.
Boxed beef cutouts were higher as choice cutouts stampeded 8.26 to 338.06 and select jumped 3.22 to 306.77. The choice/ select spread widened to 31.29 and the load count was 122.
Tuesday’s estimated slaughter is 121,000, which is above last week’s 117,00 and last year’s 119,000. The estimated total for the week (so far) is 240,000, which is above last week’s 230,000 and last year’s 232,000.
The USDA report LM_Ct131 states: So far for Tuesday in the Southern Plains negotiated cash trading has been at a standstill. In Nebraska negotiated cash trading has been mostly inactive with very light demand. In the Western Cornbelt negotiated cash trading has been slow with light demand. A few live and dressed purchases traded at 127.00 and 204.00, respectively. However, not enough purchases for a full market trend. Last week in the Southern Plains live purchases traded at 121.00. For the prior week in Nebraska live and dressed purchases traded from 123.00-126.00 and at 198.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded from 125.00-126.00 and 198.00-204.00, respectively.
The USDA is indicating cash trades last week for live cattle at 127.00 and at 197.00 – 204.00 on a dressed basis.
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 Friday, August 20, 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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