Walsh Trading Daily Insights
Commentary
October Lean Hogs gap opened higher at what turned out to be the high of the day at 91.425. The high was just a bit above the rising 200 DMA at 91.33 and this proved to be too much for the market to handle, as Hogs quickly fell apart and traded to the early session low at 89.65. Hogs tried to right the ship, but it didn’t last and it traded down to the low at 89.40. It bounced at the end of the session and settled at 90.15. The drop in Hogs took price below the 90.40 support level. A failure from settlement could see price move towards support at 88.325. If Hogs can overtake the 90.40 resistance level, a retest of the 200 DMA is possible.
The Pork Cutout Index decreased and is at 113.29 as of 8/27/2021.
The Lean Hog Index declined and is at 103.62 as of 8/26/2021.
Estimated Slaughter for Monday is 477,000, which is above last week’s 437,000 and last year’s 475,000. Saturday slaughter was revised lower to 110,000, which brings the estimated total for the week down to 2,438,000, which is below last week’s 2,445,000 and last year’s 2,653,000.
October Feeder Cattle opened higher and traded up to the session high at 169.55. It broke down and traded to the session low at 167.60. Continued weakness in corn supported Feeders and it worked its way higher and settled in positive territory at 168.95. The session traded between resistance at 169.95 and support at 167.125 as trade was once again lackluster, in my opinion. With the Live Cattle market limited in its ability to firm up and the Feeder Cattle futures at lofty levels compared to the cash index, there was little incentive to push price higher even with weak Corn futures. A failure from settlement could see support re- tested at 167.125. A failure below support could see a test of support at 165.80. If price can hold settlement, a re-test of resistance at 169.95 is possible. Resistance then comes in at 172.00.
The Feeder Cattle Index increased and is at 159.56 as of 8/27/2021.
October Live Cattle opened at the session high (129.325) and quickly moved lower, trading to the session low at 128.175. It spent the rest of the session in consolidation mode, settling near the low at 128.325. The break in cattle took price closer to the 128.10 support level in which price has been mostly trading around until the upside breakout last Monday. A disappointing occurrence to say the least… With the Labor Day Holiday creating a short kill week for next week, there is little incentive for packers to be aggressive in buying cattle, so it will be difficult for the cash market to sustain its rally, especially in the south (in my opinion). Packers have a lot of cattle under its control so they may take their time in making purchases for this week. Cut out prices are dropping again and this will also make it difficult cash to rally in my opinion. A breakdown below support at 128.10 could see price move towards the lower end of its previous trading range. Support is at 126.625. If price can hold settlement a re-test of resistance at 130.45 is possible.
Boxed beef cutouts were lower as choice cutouts decreased 2.56 to 342.78 and select dropped 2.97 to 312.55. The choice/ select spread widened to 30.23 and the load count was 86.
Monday’s estimated slaughter is 117,000, which is above last week’s 116,000 and below last year’s 119,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been at a standstill in all major feeding regions. Last week in the Texas Panhandle live purchases traded from 122.00-123.00. In Kansas last week, live purchases traded at 123.00. In Nebraska and the Western Cornbelt last week live and dressed purchases traded at 128.00 and from 202.00-208.00, respectively.
The USDA is indicating no cash trades for live cattle and 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, September 2, 2021 at 3:00 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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