Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower at the high of the day at 89.575. Hogs traded lower the rest of the session making the low at 88.375. The drop in Hogs took price down to the 88.325 support level and it settled above it at 88.80. A failure below 88.325 could see price test support at 87.10. If Hogs can hold settlement, a test of the Tuesday high is possible. Resistance then comes in at 90.40. Hogs are once again within the 89.775 to 86.05 consolidation range.
The Pork Cutout Index decreased and is at 112.65 as of 8/30/2021.
The Lean Hog Index declined and is at 103.49 as of 8/27/2021.
Estimated Slaughter for Tuesday is 479,000, which is above last week’s 474,000 and last year’s 468,000. Monday slaughter was revised lower to 471,000. The estimated total for the week (so far) is 950,000, which is above last week’s 911,000 and last year’s 943,000.
October Feeder Cattle continued its consolidation between resistance at 169.95 and support at 167.125 as trade was once again lackluster, in my opinion. It made the high at 169.625 and the low at 167.10. Settlement was at 167.75. 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 ticked lower and is at 159.54 as of 8/30/2021.
October Live Cattle continued its fall on Tuesday, breaking down below support at 128.10 and trading down to 126.825 for the session low. Settlement was at 126.90. The low was just above support at 126.625. It’s the lowest October has been since trading down to 125.825 on August 6th. So…. It is now back in the lower end of its 129.875 – 125.825 trading range established before the bull trap break out on August 23rd. A disappointing occurrence to say the least… With the Labor Day Holiday creating a short kill week for next week and reports that packers will give workers the day off on Saturday (giving them a 3-day holiday), there is little incentive for packers to be aggressive in buying cattle. Slaughter levels for this week and next are expected to be in the 570,000 – 580,000 head range. 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 and are taking their time in making purchases for this week. Cut out prices are dropping again and this will also make it difficult cash to strengthen in my opinion. A breakdown below support at 125.80 could see price move towards support is at 124.30. If price can hold settlement a re-test of resistance at 128.10 is possible.
Boxed beef cutouts were lower as choice cutouts decreased 0.67 to 342.11 and select declined 0.52 to 312.03. The choice/ select spread narrowed to 30.08 and the load count was 89.
Tuesday’s estimated slaughter is 121,000, which is above last week’s 120,000 and even with last year. The estimated total for the week (so far) is 238,000, which is above last week’s 236,000 and below last year’s 240,000.
The USDA report LM_Ct131 states: Thus far for Tuesday 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 cash trades for live cattle at 128.00 and none 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
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