Walsh Trading Daily Insights
Commentary
April Lean Hogs rallied right out of the gate making the low at 100.30 and racing to a new high at 102.85. This is just above resistance at 101.975 and this proved to be a strong level as price broke down to test the session low. It was able to bounce and settled at 101.275. Settlement was below resistance and futures are well above the cash index. Cash is climbing but futures are rising faster than the cash market. This could lead to some consolidation as futures wait to see if cash can catch up. If cash dips, futures could see some profit taking. The low was just above support at 100.075. A breakdown below here could see futures run down to test the 98.475 support level and maybe the 97.30 level. A close above 101.975 could see more aggressive buying and price could test resistance at 104.35. Slaughter levels have been low and weights are not climbing so it could mean there are less hogs out there. People are saying packers have been aggressively searching for pigs to slaughter so we could see cash prices rise as packers may have to pay up for any available supply. Cutouts also remain strong as demand is good, in my opinion.
The Pork Cutout Index increased and is at 95.49 as of 2/04/2022.
The Lean Hog Index increased and is at 84.30 as of 2/03/2022.
Estimated Slaughter for Monday is 481,000, which is above last week’s 475,000 and below last year’s 488,000. Saturday’s slaughter was revised lower to 212,000.
March Feeder Cattle continued its decline as corn prices surge. It has almost eaten up the break out candle from Wednesday and traders are seeming more nervous as corn rises. The cash index has overtaken the 160 handle again but futures traders continue their watchful eye on corn and how it will affect feed prices. The Monday range was from the 166.075 high to the 164.45 low with settlement at 165.025. The low was just above the 21 DMA at 164.275 and this must hold, in my opinion or we could see price breakdown to test support at 163.50. If settlement holds price could test resistance at 165.775 and then work its way back to resistance at 167.15.
The Feeder Cattle Index decreased and is at 160.14 as of 2/04/2022.
April Live Cattle opened higher, made a new high for the up move at 147.375 and then broke down and made the session low at 146.275. It settled near the low at 146.40. Cattle is now consolidating at the 146.825 resistance level and in my opinion needs to see cash move higher or it is in danger of pulling back to support at 144.025. Slaughter was limited last week due to weather conditions so the anticipated increase in slaughter didn’t take place and puts more pressure on producers in my opinion. It is hoped that this week could see slaughter return to the 650,000 – 660,000 range. Last weeks’ slaughter was 639,000. A breakout above 146.825 could see price move towards resistance at 149.375.
Boxed beef cutouts decreased as choice cutouts dipped 0.85 to 278.96 and select declined 1.01 to 275.04. The choice/ select spread widened to 3.92 and the load count was 80.
Monday’s estimated slaughter is 121,000, which is above last week’s 120,000 and last year’s 113,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been mostly inactive on very light demand in the Western Cornbelt. Not enough purchases for a market trend. Negotiated cash trading has been at a standstill in all other major feeding regions. Last week in the Texas Panhandle live purchases traded at 140.0. In Kansas last week live purchases traded from 139.00-140.00. Last week in Nebraska live and dressed purchases traded from 138.00-140.00 and at 222.00, respectively. In the Western Cornbelt last week live and dressed purchases traded at 140.00 and from 220.00-222.00, respectively.
The USDA is indicating no cash trades for live cattle and at 224.00 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, February 10, 2022 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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