Walsh Trading Daily Insights
Commentary
June Lean Hogs consolidated within the lower end of Tuesday’s trading range forming an inside candlestick. The high was at 115.30 and the low was at 113.10. It settled at 114.70. The low was a touch above support at 112.975 and the high was above resistance at the rising 21-DMA now at 115.15. Settlement was below the 21-DMA. Trade was muted as traders try to dance around bullish fundamentals with a cash market that has been stalling. Futures are still rich to the cash index and there are questions about future demand for pork. Exports are out before the open on Thursday and could influence the price action. If price can get above and hold the 21-DMA, we could see price test resistance at 115.925. Resistance then comes in at 117.20. A failure from settlement, could see price continue to work its way lower and re-test support at 112.975. Support then comes in at 111.675.
The Pork Cutout Index down ticked and is at 105.31 as of 4/05/2022.
The Lean Hog Index decreased and is at 101.66 as of 4/04/2022.
Estimated Slaughter for Wednesday is 460,000, which is below last week’s 480,000 and last year’s 494,000. The estimated total for the week (so far) is 1,417,000 which is below last year’s 1,435,000 and above last year’s 1,309,000.
May Feeder Cattle opened higher, made the session high at 160.45 and then broke down to a new low for the down move. The low was at 157.70. Price reversed course and rallied to near the high and then dipped to settle at 159.95. The rally stopped just short of resistance at 160.625 and could key trade for Thursday. A rally past 160.625 could see price test resistance at the flattening 200-DMA, now at 162.175. A failure from settlement could see price re-test support at 157.30. Support then comes in at 156.075.
The Feeder Cattle Index decreased and is at 155.76 as of 4/04/2022. (no update as I write this article)
June Live Cattle opened higher, broke down to a new low for the down move at 132.475. The breakdown took price below the rising 200-DMA now at 133.525 and through support at 132.95. Support held and price turned higher, rallying the rest of the session to the high at 134.625. The rally took price to resistance at 134.55 and back above the 200-DMA, settling above it at 134.225. This a positive development for cattle and if it holds could lead to a recovery in the futures. Cash has been holding well with this breakdown in futures, remaining steady with last week’s prices, in fact it traded as high as 142.00. If price fails at settlement, we could see price re-test support at 132.95. Support then comes in at 130.45. If price can overtake resistance at 134.55, we could see price test resistance at the declining 21-DMA now at 136.10. Resistance then comes in at 136.35.
Boxed beef cutouts were lower as choice cutouts dipped 0.49 to 271.04 and select decreased 1.85 to 261.05. The choice/ select spread widened and is at 9.99 and the load count was 141.
Wednesday’s estimated slaughter is 125,000, which is even with last week and above last year’s 121,000. The estimated total for the week (so far) is 371,000, which is above last week’s 369,000 and last year’s 346,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited with light demand in Nebraska and Western Cornbelt. In the Southern Plains and Colorado negotiated cash trading has been mostly inactive with light demand. Not enough purchases in any region for a market trend. Tuesday was the last reported market in all regions. In the Southern Plains and Colorado live purchases traded at 138.00. 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 at 140.00 and 222.00, respectively.
The USDA is indicating cash trades for live cattle from 136.00 – 142.00 and from 219.00 – 225.50 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
888.391.7894
Fax: 312.256.0109
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
tested support at the
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.