Walsh Trading Daily Insights
Commentary
June Lean Hogs opened higher and broke down to the session low at 118.175. This was a 61.8% retracement of Monday’s big rally. Bulls took over and price grinded higher the rest of the session, making the high at the end of the day at 120.225. It settled nearby at 120.075. The rally took price past resistance at 119.90 and it was able to settle above it. This is positive price action but the session didn’t make a new high and formed an inside candlestick. So, we got the consolidation as traders weren’t able to take price to the next level after yesterday’s big rally. If price can take out the Tuesday high, we could test resistance at 122.275. An inability to take price higher could see consolidation continue. A failure from the low could see price test support at 117.20.
The Pork Cutout Index decreased and is at 104.19 as of 3/21/2022.
The Lean Hog Index increased and is at 101.80 as of 3/18/2022.
Estimated Slaughter for Tuesday is 479,000, which is even with last week and above last year’s 468,000. Monday’s slaughter was revised lower to 468,000. The estimated slaughter for the week (so far) is 947,000, which is above last week’s 945,000 and below last year’s 952,000.
May Feeder Cattle opened higher, traded to the session high at 167.35 and broke down the rest of the session to the low at 165.25. Settlement was near the low at 165.425. The high was just above resistance at 167.15 and the low and settlement took price below support at 165.775. The candle was an outside day with a lower close as the Tuesday range had a higher high than Monday and a lower low than Monday. Corn was mixed on Tuesday, with the front month lower and the deferreds higher. Feeders, in my opinion, didn’t respond well to that price action. If price continues lower on Wednesday, we could test support at the 50-DMA at 164.10. The 100-DMA is just below it at 163.525. A reversal off the low could see price revisit the key level at 167.15.
The Feeder Cattle Index increased and is at 155.13 as of 3/21/2022.
June Live Cattle continued its consolidation on Tuesday. It opened higher and made the high early in the session at 137.125 and grinded lower the rest of the session to the low at 135.50. It settled near the low at 135.70. The breakdown took price towards the lower end of the consolidation band it is in. The high end of the band is at 137.75 and the low of the band is at 134.75. The decline keeps price below the key level at 136.35. A breakdown from settlement could see price test support at 134.55. If price can overtake 136.35 again, we could see a re-test of resistance at 137.875. Resistance then comes in at 138.60.
Boxed beef cutouts were mixed as choice cutouts rose 1.47 to 259.97 and select declined 0.61 to 251.89. The choice/ select spread widened and is at 8.08 and the load count was 125.
Tuesday’s estimated slaughter is 123,000, which is below last week’s 125,000 and above last year’s 118,000. The estimated total for the week (so far) is 242,000, which is below last week’s 250,000 and above last year’s 234,000.
The USDA report LM_Ct131 states: Thus far for Tuesday 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 Southern Plains live purchases traded at 138.00. In Nebraska last week live and dressed purchases traded at 138.00 and 221.00, respectively. Last week in the Western Cornbelt live and dressed purchases traded from 140.00- 142.00 and at 222.00, respectively.
The USDA is indicating cash trades for live cattle at 141.00 and from 220.00 – 222.00 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, March 24, 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
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