Walsh Trading Daily Insights
Commentary
June Lean Hogs continued its decent on Tuesday, breaking down past support at the 50-DMA (112.475) and taking out the April 5th low at 112.20 to a new low for the down move at 110.60. The high came in early in the session at 114.825 and settlement was at 111.175. The inability of cutouts to sustain itself above 110.00 and an erratic cash hog market has traders once again looking at futures as too expensive to cash. Traders’ expectations for continued upward pressure on cutouts and cash hogs has diminished as retailers are pushing back as fears of demand destruction grow due to the high prices. Settlement was below support at 111.675 and puts support at 109.85 within reach. Support then comes in at 107.925. If price can get above 111.675, we could consolidate within the Tuesday range.
The Pork Cutout Index decreased and is at 108.53 as of 4/25/2022.
The Lean Hog Index increased and is at 102.5 as of 4/22/2022.
Estimated Slaughter for Tuesday is 480,000, which is above last week’s 479,000 and below last year’s 485,000. The estimated total for the week (so far) is 945,000, which is above last week’s 832,000 and below last year’s 965,000.
August Feeder Cattle looked like it wanted to continue its recovery early in the trading session, opening lower and the rallying to the session high at 175.10. It couldn’t sustain the recovery however, breaking down and taking out the Monday low to a new low at 172.825. It settled near the low at 173.15. The low and settlement took out support at 173.325 and puts support at 172.00 in play. A failure below 172.00, could see price work its way to support at 169.95. With August the lead contract, traders are looking closely at the differential between the cash index and futures and are bringing futures closer to the index. With corn showing strength in the deferred months and the nearbys above 8.00, traders sold the early rally. August is rich to cash, in my opinion. If price can hold settlement, we could see a test of resistance at 175.70. Resistance then comes in at 178.95.
The Feeder Cattle Index decreased and is at 156.12 as of 4/25/2022.
June Live Cattle consolidated within the Monday range forming an inside candlestick. With cash continuing to be mixed, with the Northern regions much stronger than the southern regions, traders are watching and waiting to see if the South can move higher. Once again packers have been buying cattle early in the trading week and that could be positive for the cash market going forward. It could be they need cattle or it is just show with congress looking at Senator Grassley’s bill and scrutinizing the packing industry. We’ll see…. Once again Cattle is trading around the key level at 136.35. The high was just above it at 136.55 and the low and settlement were below it. The low was at 135.50 and settlement was at 136.25. If price falls below the Tuesday low, we could see price re-test support at 134.5 and the rising 200-DMA now at 134.475. If price can rally past the Tuesday high, we could see price test resistance at 137.875. There is a gap from the Friday low at 138.35 and the Monday high at 136.85. The 8-DMA is at 137.20. A lot of hurdles for June Cattle. Continuing strength in the cash market could ignite futures.
Boxed beef cutouts decreased as choice cutouts dropped 2.43 to 264.17 and select dipped 0.29 to 256.23. The choice/ select spread narrowed and is at 7.94 and the load count was 183.
Tuesday’s estimated slaughter is 125,000, which is above last week’s 124,000 and last year’s 121,000. The estimated total for the week (so far) is 250,000, which is above last week’s 236,000 and last year’s 239,000.
The USDA report LM_Ct131 states: Thus far for Tuesday in Kansas negotiated cash trading and demand have been moderate. In the Texas Panhandle negotiated cash trading has been limited on light demand. Compared to the last reported market on Monday live purchases traded steady at 140.00. In Nebraska negotiated cash trading and demand have been moderate. Compared to last week live purchases traded steady to 1.00 higher from 145.00-146.00 and dressed purchases traded unevenly steady at 232.00. In Colorado and Western Cornbelt negotiated cash trading has been limited on light demand. Not enough purchases in these regions for a full market trend. 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 139.00 – 147.00 and from 225.00 – 232.00 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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