Walsh Trading Daily Insights
Commentary
June Lean Hogs nosedived right from the open as China worries, weak equity markets and a strong dollar inflicted a wave of bearishness through the market. The US $ index exploded higher on Monday, dampening prospects for exports and with the China lockdowns ongoing as they have not been able to achieve zero infections from covid put demand worries in the forefront of traders’ minds. The lockdown also put pressure on the equity markets as Chine is instrumental in supplying the world with goods. (Equity markets did recover by the end of the day as the acceptance of Elon Musk’s bid to purchase Twitter excited the Equity market, in my opinion.) The nosedive took price down the limit and that is where it settled. The range was 117.90 high – 1140.025 low and settlement at the low…. Ouch! The break down took price below support at 114.675 and puts the April 5th low at 112.20 in traders’ crosshairs. Support is just above this low at 112.275. If price can get above 114.675, we could consolidate within the Monday range.
The Pork Cutout Index increased and is at 109.33 as of 4/22/2022.
The Lean Hog Index increased and is at 101.67 as of 4/21/2022.
Estimated Slaughter for Monday is 465,000, which is above last week’s 353,000 and below last year’s 480,000.
August Feeder Cattle is now the lead contract as its volume is higher than the May contract’s volume. A bearish Cattle On Feed report sent cattle futures in a tailspin with the Feeder cattle breaking down to 173.45, which is just above support at 173.325. The high came in at 176.025 and it settled at 174.50. If price can hold settlement, we could see a test of resistance at 175.70. Resistance then comes in at 178.95. A failure below support (173.325), could see price test support at 172.00.
The Feeder Cattle Index increased and is at 156.52 as of 4/22/2022.
June Live Cattle gap opened lower and collapsed. It broke down to the low at 134.45 which is just above support the rising 200-DMA now at 134.40 and 134.35 support level. Price rebounded off of support and settled at 135.425. The high was the opening price at 136.85. It was a bearish Cattle On Feed report that caught traders by surprise, sending price in its downward spiral. If price falls below support, we could see price test support at 132.95. Support then comes in at 130.45. If price can hold settlement, we could see price test resistance at 136.35. Resistance then comes in at the 8-DMA now at 137.25.
Boxed beef cutouts were mixed as choice cutouts declined 1.31 to 266.60 and select rose 1.75 to 256.52. The choice/ select spread narrowed and is at 10.08 and the load count was 67.
Monday’s estimated slaughter is 125,000, which is above last week’s 112,000 and last year’s 118,000.
The USDA report LM_Ct131 states: So far for Monday in the Texas Panhandle negotiated cash trading has been moderate on light demand. Compared to last week live purchases traded steady at 140.00. In Kansas, Northern Plains and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in these regions for a market trend. Last week in Kansas live purchases traded at 140.00. For the prior week in Nebraska live and dressed purchases traded from 144.00-146.00 and 230.00-236.00, respectively. In Colorado for the previous week live purchases traded from 144.00- 145.00. Last week in the Western Cornbelt live and dressed purchases traded from 145.00-146.00 and 230.00-236.00, respectively.
The USDA is indicating cash trades for live cattle from 140.00 – 145.00 and from 225.00 – 230.00 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 28, 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
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