Walsh Trading Daily Insights
Commentary
April Lean Hogs is trading under the influence of a bearish engulfing candle pattern. It broke down below the 101.975 support level after a strong open and traded to the low of the day at 101.00. Bulls took over and price rallied to the session high at 103.825, which is just below the Friday high at 103.85. Unable to push higher price broke down and settled in the middle of the range at 102.325. Settlement is just above support and if it holds tomorrow, we could retest the Friday high. A failure below the 101.975 support level could see price test the Monday low and then work its way to support at 100.075. Cash markets are strong, hog supplies are limited and slaughter has returned to the new normal which is bullish in my opinion. Futures, however, are rich to the cash market in my opinion, and this could lead to some selling pressure in the market. Futures tend to snap back towards cash when over extended, in my opinion as now that the February contract has expired, April is now the spot as well at the lead contract by volume.
The Pork Cutout Index increased and is at 102.01 as of 2/11/2022.
The Lean Hog Index increased and is at 88.92 as of 2/10/2022.
Estimated Slaughter for Monday is 470,000, which is below last week’s 481,000 and above last year’s 405,000.
March Feeder Cattle opened lower and traded down to the session low at 165.70. This is right at support at 165.775 and bulls took over and the market raced to the high of the day at 167.80. This is just above resistance at 167.15 and price couldn’t sustain the rally, pulling back and settling at 166.875. This is just below resistance and must be overcome on Tuesday or we could see another challenge of support. If support (165.775) fails, price could test the rising 50 DMA now at 164.975 and then the 21 DMA now at 164.55. A rally past resistance, could see price test the Thursday high at 169.00.
The Feeder Cattle Index increased and is at 163.16 as of 2/11/2022.
April Live Cattle opened higher, rallied to the session high at 146.875 the broke down to the low of the day at 145.275. It recovered and settled at 146.35. The low is just above the February 8th low at 145.225 leaving cattle consolidating in a trading range with the range high at 148.70. Cattle is consolidating around the 146.825 resistance level and in my opinion needs to see cash move higher. Resistance then comes in at 149.375 and the next support level is at 144.025.
Boxed beef cutouts were mixed as choice cutouts declined 0.56 to 273.96 and select increased 0.92 to 2685.75. The choice/ select spread narrowed to 5.21 and the load count was 76.
Monday’s estimated slaughter is 121,000, which is even with last week and above last year’s 77,000.
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 Southern Plains live purchases traded at 140.00. In Nebraska last week live and dressed purchases traded at 140.00 and 224.00, respectively. Last week in the Western Cornbelt live and dressed purchases traded from 140.00-142.00 and at 224.00, 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, February 17, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.