Walsh Trading Daily Insights
Commentary
April Lean Hogs continued its pullback on Monday, opening strong but with continued fear from the Russian invasion of Ukraine permeating throughout traders’ psyche, finally wore out Hogs, sending prices lower on the day. The high came in early at 104.50 and the low was at 102.875. Settlement was at 103.50. With strong hog fundamentals taking a back seat to outside market forces, traders should be cautious in my opinion. The high poked through resistance at 104.35 and the low dipped below the rising 21-DMA now at 103.125. Settlement was above this key support level. If this level fails, we could see a further breakdown to the next support level at 101.975. Support then comes in at the February 14th low at 101.00. If outside markets calm down and settlement holds, we could see a recovery to resistance at 104.35. The flattening 13-DMA is next at 105.60.
The Pork Cutout Index increased and is at 110.99 as of 2/25/2022.
The Lean Hog Index was increased and is at 98.40 as of 2/24/2022.
Estimated Slaughter for Monday is 470,000, which is below last week’s 478,000 and last year’s 493,000. Friday and Saturday slaughter was revised lower to 471,000 and 126,000 respectively. The total for last week is lowered to 2,496,000.
April Feeder Cattle broke down hard and traded through support at the rising 200-DMA now at 160.75. Surging corn prices put the Feeder market in the doldrums as fear dominated the markets with Russia increasing its nuclear readiness. This shocked traders and created more uncertainty in the markets, in my opinion. The crash took price to the session low at 159.90. The high came in the opening 5-minutes at 163.975. Settlement was at 162.00. Feeders had gap opened lower, but closed the gap in those opening minutes of the session. This tested the rising 100-DMA at 153.15 and the key level at 163.50. The test and ability of Feeders to rally after punching through the 200-DMA is a positive and settlement was right at the key level at 162.00. Feeders could consolidate within this 100-DMA – 200-DMA band for a day or two. If settlement holds, we could see price re-test resistance at 163.50. A failure below 162.00 could see price re-test support at the 200-DMA. Support then comes in at 160.625.
The Feeder Cattle Index declined and is at 159.91 as of 2/25/2022.
April Live Cattle also felt the pain of outside markets. It broke down and traded to the low at 140.25. The low is just above support at 140.175 and buying came in and price recovered to settle at 141.425. The high came in at 142.55. This is just above the key level at 142.25. Settlement was below the key level and the rising 50-DMA now at 142.00. A breakdown below settlement could see price re-test support at 140.175. If price can push through the Monday high, a test of resistance at 144.025 is possible.
Boxed beef cutouts decreased as choice cutouts declined 0.76 to 257.51 and select fell 2.00 to 253.41. The choice/ select spread narrowed and is at 4.10 and the load count was 85.
Monday’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 Monday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 142.00. In Nebraska live purchases traded from 142.00-114.00 and dressed purchases traded at 227.00. In the Western Cornbelt live and dressed purchases traded at 144.00 and 227.00, respectively.
The USDA is indicating cash trades for live cattle from 140.50 – 142.00 and nothing 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, March 3, 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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