Walsh Trading Daily Insights
Commentary
April Lean Hogs is trading under the influence of a bearish engulfing candle pattern. It opened higher and broke down to the session low at 102.075. The low is just above support at 101.975 and bullish traders took over and sent price to the high of the day at 105.10. The rally took price past resistance at 104.35 where some selling came in and took hogs back below resistance and it settled below it at 104.15. Hogs are consolidating around resistance at 104.35 and support at 101.975. There are good reasons in my opinion to be bullish hogs as mentioned before, with cash and cutouts strong, demand for pork remains healthy and now we have bird flu coming to town. It is causing some culling of turkey and chicken and could lead to a shortage of poultry. This could drive more demand to pork as poultry exports could drop and prices surge locally in this category. Hogs are still rich to cash and if it can’t settle above 104.35 and continue higher it could fail and fall below the 101.975 support level as bulls may take profits. We could see price test the Monday low and then work its way to support at 100.075. A settle above 104.35 could see price test resistance at 106.85 and then the February 10th high at 107.70. The February 10th high is just below resistance at 107.925.
The Pork Cutout Index increased and is at 104.07 as of 2/14/2022.
The Lean Hog Index increased and is at 90.51 as of 2/11/2022.
Estimated Slaughter for Tuesday is 478,000, which is above last week’s 472,000 and last year’s 409,000. The weekly estimated total is 948,000, which is below last week’s 953,000 and above last year’s 814,000.
March Feeder Cattle opened higher and made the session low at 167.15. This is right at the key level at 167.15 and with corn breaking down saw excited bulls come in and take price on a speedy ride to the high of the day at 169.375. This is a new high for the current move, taking out the February 10th high at 169.00. Bulls couldn’t sustain the rally and it fell back to just under the Monday high. It recovered and settled at 168.50. Traders are hoping the breakdown in corn is just the start of a broader decline as rumors of a calming in the Ukraine – Russia – NATO conflict put pressure on the grain and oilseed markets. If corn continues lower, we could see some eager traders bid up feeder cattle. If settlement holds, we could see a re-test of the Tuesday high and then a push to resistance at 169.95. Resistance then comes in at 172.00. A failure from settlement could see price revisit support at 167.15.
The Feeder Cattle Index decreased and is at 162.71 as of 2/14/2022.
April Live Cattle continued to trade around the key level at 146.825. It opened unchanged and rallied to the session high at 147.475. It turned south and trade to the session low at 146.275. It consolidated the rest of the session and settled at 146.90. Cash remained quiet and traders are in waiting and see mode. Settlement is just above the key level at 146.825 and if it holds, we could revisit the Monday high. A rally past the high could see price move towards resistance at 149.375. A breakdown below 146.825 could see price test the rising 21 DMA now at 144.525. The next support level is at 144.025.
Boxed beef cutouts decreased as choice cutouts dropped 3.59 to 270.37 and select decreased 0.93 to 267.82. The choice/ select spread narrowed to 2.55 and the load count was 165.
Tuesday’s estimated slaughter is 123,000, which is above last week’s 122,000 and last year’s 92,000. The estimated total for the week is 244,000, which is above last week’s 243,000 and last year’s 169,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been mostly inactive on very light demand in Nebraska and the Western Cornbelt. Not enough purchases for a market trend. Negotiated cash trading has been at a standstill in the Southern Plains. 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 cash trades for live cattle at 142.00 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, 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
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