Walsh Trading Daily Insights
Commentary
June Lean Hogs took a hard left to the chin and was knocked down to the canvas. It went limit down after gap opening lower, trading to the session low at 115.70. It was able to settle off the limit price at 116.15. The gap is from the Friday low at 120.225 to the Monday high at 119.90. The open was right at the key level at 119.90 and the break down swift, never staging any strong bounce off the early lows, continuing south until the limit price was reached and then consolidating near the limit till the end of the session. The breakdown took price below support at 117.20 and 115.925. The only positive out of the session was it was able to settle above the 115.925 support level. Futures/ cash is still rich and a bullish Hogs and Pigs report was ignored, already priced in??? and demand worries continue to surface as inflation talk throughout the economic horizon puts eating pork on the back burner, according to some. China’s lockdown, German meat consumption declined in 2021 are causing some to believe exports will decline creating excess levels of pork for US consumers to buy. If price can hold above settlement, we could see price consolidate within the Monday range. A failure from the low, could see price continue to work its way lower and test support at 114.65. Support then comes in at 112.975.
The Pork Cutout Index declined and is at 105.51 as of 4/01/2022.
The Lean Hog Index decreased and is at 102.63 as of 3/31/2022.
Estimated Slaughter for Monday is 477,000, which is above last week’s 476,000 and last year’s 336,000. Friday slaughter was revised lower to 459,000. The estimated total for the week (so far) is 2,434,000 which is above last year’s 2,419,000 and below last year’s 2,460,000.
May Feeder Cattle gap opened lower, closed tossed the gap as it rallied to the session high at 166.05 and then in a common theme for the livestock markets on Monday… it tanked! It broke down to the Rising 200-DMA on my continuous chart now at 162.125, with the low just above it at 162.15. It settled nearby at 162.475Corn strength and it is perceived to continue higher, led to the downfall of the Feeder Cattle market, in my opinion. If price breaks down below the 200-DMA, we could see price continue lower and test support at 160.625. If settlement holds, Feeders could test resistance at 163.50. Resistance then comes in at the confluence of the 21, 50 and 100-DMAs, now at 164.30, 164.25 and 164.275, respectively.
The Feeder Cattle Index increased and is at 156.15 as of 4/01/2022.
June Live Cattle gap opened lower, closed the gap as it rallied to the session high at 136.35, and then broke down to the low at 133.875. It bounced and settled at 134.925. The high stopped right at resistance at 136.35 and the decline took price below support at 134.55. The breakdown took cattle through the lower end of its 138.52 – 134.075 trading range to a new low at 133.875. The bounce at the end of the day took price back into the band. Corn strength and Feeder Cattle weakness, plus the proverbial outcries of inflation causing demand destruction for beef sent negative waves across the cattle market. If price fails to hold 134.55, we could see price test support at the rising 200-DMA on the continuous chart now at 133.40. Support then comes in at 132.95. If price can hold settlement, we could see price re-test resistance at 136.35. Resistance then comes in at 137.875.
Boxed beef cutouts were mixed as choice cutouts increased 0.90 to 268.04 and select decreased 0.82 to 261.70. The choice/ select spread widened and is at 6.34 and the load count was 63.
Monday’s estimated slaughter is 121,000, which is above last week’s 119,000 and last year’s 105,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been slow with light demand in the Southern Plains. A few early live purchases traded steady at 138.00, when compared to last week. In Nebraska and Western Cornbelt negotiated cash trading was limited on light demand. Not enough purchases in these regions for a market trend. In Nebraska live and dressed purchases traded from 138.00- 140.00 and at 222.00, respectively. In the Western Cornbelt live and dressed purchases traded from 139.00-143.00 and at 222.00, respectively.
The USDA is indicating cash trades for live cattle from 138.00 – 140.00 and at 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, April 7, 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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