Walsh Trading Daily Insights
Commentary
June Lean Hogs gap opened lower, closed the gap while making the high at 121.075 and broke down the rest of the session, making the low at 118.325 at the end of the day. Settlement was at 118.75. The break down took price below the Monday break out rally low and the Wednesday low was right at support at the rising 8-DMA (118.325), putting Hogs on fragile ground. The recent rally didn’t hold as once again the futures gains outpaced the cash market gains. This caused the snap back in my opinion. Futures are still rich to cash as futures are normally around 9 handles over the Lean Hog Index. Settlement puts futures 18.25 over the current LHI. The runs higher come about as traders see the daily cutout prices show signs of breaking higher… then stall. This has led to the pull back in my opinion. Excitement that we will see a strong run in the cash and then the reality as the increases, so far haven’t stuck. Creating disappointment. A failure below the low, could see price work its way lower and test support at 117.20. If price can hold settlement, we could re-test the flattening 21-DMA, now at 119.75 and nearby resistance at 119.90. Exports are out before the Thursday open.
The Pork Cutout Index ticked higher and is at 108.80 as of 4/19/2022.
The Lean Hog Index increased and is at 100.50 as of 4/18/2022.
Estimated Slaughter for Wednesday is 483,000, which is above last week’s 478,000 and below last year’s 488,000. The estimated total for the week (so far) is 1,315,000 which is below last week’s 1,420,000 and last year’s 1,452,000.
May Feeder Cattle opened higher, made the low at 160.725 and raced to the high of the day at 163.40. It drifted the rest of the session and settled at 162.45. The cattle cash market was strong today and traders bid up Feeders in all the excitement in the cash market as corn was strong and couldn’t take away from the hope of higher cattle prices going forward. (at least for Wednesday). The rally took price back up to resistance at the declining 21-DMA, now at 163.20 and the 163.50 resistance level. This, for the second time stopped the rally and it settled below this area. Settlement was above the now rising 200-DMA at 162.325. This is a positive development and trade on Thursday must hold above the 200-DMA and support nearby at 162.00. A failure from 162.00 could see price test support at 160.625. Support then comes in at 157.30.A rally past 163.50 could see price test resistance at the declining 100-DMA at 164.25. Resistance then comes in at 165.775.
The Feeder Cattle Index increased and is at 154.66 as of 4/19/2022.
June Live Cattle broke out of its recent trading range, racing higher to 138.85, while making the low at 136.86. The rally took price past resistance at 137.875 and 138.60, stopping just below the declining 50-DMA at 139.00. Settlement was solid at 138.625. Again, the fat cash market showing signs of strength as prices reached a high at 147.00 in the North, while the South saw prices trade above 140.00 creating fresh excitement in the futures market. If price falls below 137.875, we could see price test support at 136.35. If price can hold settlement, we could see price test resistance at the rising 100-DMA, now at 139.55. Resistance then comes in at 140.175.
Boxed beef cutouts were lower as choice cutouts decreased 1.11 to 268.82 and select dropped 2.68 to 256.53. The choice/ select spread widened and is at 12.29 and the load count was 137.
Wednesday’s estimated slaughter is 125,000, which is below last week’s 126,000 and above last year’s 120,000. The estimated total for the week (so far) is 361,000, which is above last week’s 375,000 and above last year’s 360,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been slow on light demand in Nebraska with a few live purchases at 146.00. In the Western Cornbelt has been slow on light demand with a few live purchases at 145.00. Negotiated cash trading has been mostly inactive on very light demand in the Southern Plains and at a standstill in Colorado. Not enough purchases in any region for a market trend. On Tuesday in the Southern Plains live purchases traded at 140.00. In Nebraska on Tuesday, live and dressed purchases traded from 144.00-146.00 and at 230.00, respectively. On Tuesday in the Western Cornbelt live and dressed purchases traded from 145.00-146.00 and at 230.00, respectively. The last reported market in Colorado was last week with live purchases from 140.00- 142.00.
The USDA is indicating cash trades for live cattle from 135.00 – 147.00 and from 228.00 – 238.00 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 21, 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.
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