Walsh Trading Daily Insights
Commentary
June Lean Hogs opened lower and consolidated within Tuesday’s break out candle. The high was at 118.625 and the low at 117.00. Settlement was at 117.60. Tuesday’s rally was unable to overtake the 13-DMA and Wednesday wasn’t any different. The declining 13-DMA is at 118.675 and provided resistance to Hogs. The rising 21-DMA at 118.55 was bested on Tuesday but Hogs couldn’t above it today. It led to a test of support at 117.20 with the low just below it and settlement just above it. Cutouts have firmed so far this week but the Lean Hog Index has broken below 100. It needs to turn around and move higher or futures could break lower again. A failure below the low, could see price work its way lower and re-test support at 115.925. Support then comes in at 114.675. If price can hold settlement, we could re-test the 13 and 21-DMAs, a rally past the Wednesday high could see a move towards resistance at 119.90. We get the Export Sales report before the open on Thursday.
The Pork Cutout Index increased and is at 104.86 as of 4/12/2022.
The Lean Hog Index decreased and is at 99.10 as of 4/11/2022.
Estimated Slaughter for Wednesday is 478,000, which is above last week’s 451,000 and even with last year. Tuesday’s slaughter was revised lower to 467,000. The estimated total for the week (so far) is 1,420,000 which is above last week’s 1,408,000 and below last year’s 1,445,000.
May Feeder Cattle gap opened higher, traded past resistance at 163.50 to the session high at 163.575 and then worked lower the rest of the session to the low at 161.625. It settled near the low at 161.95. The low was higher than the Tuesday high at 161.575, so a small gap remains in place. It formed a Doji candle stick and a gap open lower could create an Island Top and may set the stage for Feeders to revisit the recent lows. A rally past the flattening 200-DMA, now at 162.25 could see price revisit resistance at 163.50. A failure from settlement could see price test support at 160.625. Support then comes in at 157.30.
The Feeder Cattle Index up-ticked and is at 155.86 as of 4/12/2022.
June Live Cattle followed through to the upside after Tuesday’s break out rally. It made a new high at 137.10, with the low coming in at 136.275. It settled at 136.875. Cash is showing some strength this week reaching 145.00 on a live basis and 231.00 on a dressed basis. Slaughter levels are high and it reached 126,000 on Wednesday. Impressive numbers. Can it be maintained. Slaughter should be down from last week as Friday is a holiday (Good Friday) and Sunday is Easter. Packers may give workers a day off on Saturday. The futures price action was disappointing, forming a small bodied candle, unable to take advantage of the positive cash price action. The positive about the price action is it settled above resistance at 136.35. If price falls below 136.35, we could see price re-test support at 134.55. Support then comes in at 132.95. If price can hold settlement, we could see price test resistance at 137.875. Resistance then comes in at 138.60.
Boxed beef cutouts were lower as choice cutouts decreased 1.11 to 272.36 and select declined 1.34 to 259.37. The choice/ select spread widened and is at 12.99 and the load count was 149.
Wednesday’s estimated slaughter is 126,000, which is above last week’s 125,000 and last year’s 116,000. The estimated total for the week (so far) is 375,000, which is above last week’s 371,000 and last year’s 346,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading has been slow with light to moderate demand in the Southern Plains, Nebraska and Western Cornbelt. In the Southern Plains live purchases traded steady at 139.00, when compared to the last reported market on Tuesday. In Nebraska dressed purchases traded 1.00 higher at 226.00, when compared to the last reported market on Tuesday, with a few up to 231.00. Not enough live purchases for a market trend. Tuesday saw live purchases from 140.00-142.00. In the Western Cornbelt dressed purchases traded 4.00 higher at 226.00, when compared to last week, with a few up to 230.00. A few live purchases traded steady to 1.00 higher at 143.00, when compared to the last reported market on Tuesday, with a few up to 145.00. Thus far for Wednesday in Colorado negotiated cash trading has been at a standstill. The last reported market was on Tuesday with live purchases from 140.00-142.00.
The USDA is indicating cash trades for live cattle from 138.00 – 145.00 and from 220.00 – 231.00 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 14, 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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Fax: 312.256.0109
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