Walsh Trading Daily Insights
Commentary
April Lean Hogs continued its pullback after making a new high on Wednesday. It opened strong and made the session high at 109.65. The weight of outside markets took over and hogs broke down and it traded to the session low at 105.40. This is just below support at the rising 13-DMA at 105.50. Settlement was just above this key level at 105.525. If this level fails, we could see a further breakdown to the next support level at 104.35. If outside markets calm down and settlement holds, we could see a recovery to resistance at 106.85. Resistance then comes in at 107.925.
The Pork Cutout Index increased and is at 111.06 as of 2/23/2022.
The Lean Hog Index was unchanged and is at 98.16 as of 2/22/2022.
Estimated Slaughter for Thursday is 476,000, which is above last week’s 451,000 and below last year’s 495,000. The weekly estimated total is 1,899,000, which is above last week’s 1,871,000 and below last year’s 1,978,000.
April Feeder Cattle is now the lead contract as its volume has overtaken the March volume. The Russian invasion of Ukraine created pandemonium in the outside markets and the grain and oilseed markets surged in overnight trading. This surge in price led to the Feeder Cattle market crash in which the April contract collapsed and traded down its 6.25 limit. The low was at 162.025 with the high coming in at 166.05. The limit price was just above support at 162.00 and with corn pulling back off its overnight highs we saw Feeder Cattle recover and settle at 163.80. This is above the key level at 163.50 and if corn can continue to fall back, we could see Feeder cattle take back more of its decline. If settlement holds, we could see price resistance at 165.775. A failure below 163.50 could see price re-test support at 162.00. Support then comes in at 160.625.
The Feeder Cattle Index declined and is at 161.82 as of 2/23/2022.
April Live Cattle also felt the pain of outside markets. It gap opened lower and traded down the rest of the session, making the low at 142.10. The low is just below support at 142.25 while it settled just above it at 142.30. The high came in at 144.45. The gap is from the high to the Wednesday low at 144.55. If markets calm down, we could see a retracement in the cattle market. Continued fear could see price test support at the rising 50-DMA now at 141.825. A breakdown below the 50-DMA could see price test support at 140.175. If settlement holds, a test of resistance at 144.025 and the gap is possible.
Boxed beef cutouts decreased as choice cutouts declined 1.64 to 259.24 and select collapsed 4.41 to 254.55. The choice/ select spread widened and is at 4.68 and the load count was 170.
Thursday’s estimated slaughter is 124,000, which is above last week’s 122,000 and last year’s 121,000. The estimated total for the week is 478,000, which is below last week’s 488,000 and last year’s 484,000.
The USDA report LM_Ct131 states: So far for Thursday negotiated cash trading has been slow on light demand in all regions. In the Southern Plains a few live purchases traded steady at 142.00 when compared to last week. In the Western Cornbelt, compared to Wednesday, live purchases traded steady to 1.00 higher from 144.00-145.00. Not enough dressed purchases for a market trend. On Wednesday dressed purchases traded from 226.00-227.00. In Nebraska not enough purchases for a market trend. On Wednesday live and dressed purchases traded at 144.00 and 227.00, respectively.
The USDA is indicating cash trades for live cattle from 138.00 – 145.00 and from 225.00 – 229.00 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 Friday, February 25, 2022 at 2:00 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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