Walsh Trading Daily Insights
Commentary
June Lean Hogs continued its fall on Tuesday, breaking down past support at 104.35 and 101.975 to a new low for the down move at 101.875. The high came in early in the session at 106.50 and settlement was at 102.20. The inability of cutouts to forge higher and instead decline after peaking on April 22 at 111.28 plus a flat cash hog market has traders liquidating futures at a fast pace. Whereas futures were trading expensive to cash, it is now trading under the normal premium to cash at this time period. If futures want to continue lower it must break through support at the rising 100-DMA now at 101.20. This would put support at 100.075 in play. If price can hold settlement, we could consolidate within the Tuesday range, challenging resistance at 104.35.
The Pork Cutout Index increased and is at 105.38 as of 5/02/2022.
The Lean Hog Index decreased and is at 101.59 as of 4/29/2022.
Estimated Slaughter for Tuesday is 480,000, which is even with last week and below last year’s 486,000. The estimated total for the week (so far) is 962,000, which is above last week’s 945,000 and last year’s 960,000.
August Feeder Cattle opened lower and broke down to the session low at 172.425 as corn was rising early in the session. Feeders, however caught a bid and rallied past Monday’s high and then corn started making its way lower driving Feeders higher to test resistance at 175.775, making its high at 176.45 and settling above resistance at 176.275. A failure below 175.775, could see price work its way to support at 173.25. If price can hold settlement, we could see a test of the April 22 high at 178.225. Resistance is nearby at 178.95.
The Feeder Cattle Index increased and is at 155.77 as of 5/02/2022.
June Live Cattle opened higher and traded down to the low of the day at 134.80. This was right on support at the rising 200-DMA now at 134.80. Futures bounced off support and rallied to the session high at 136.275. This is just below resistance at 136.35. Futures broke down and then consolidated just above the session low, settling near the low at 135.325. Cash didn’t trade on Monday, but trade took place on Tuesday, ranging from 144.00 to 146.00. This is much higher than futures as futures seem to be discounting the strength in cash and assuming cash is going to collapse down to the futures levels, while Feeders surge higher. That doesn’t make sense to me as high corn and rich feeder cattle doesn’t make money for producers, in my opinion. If price falls below the 200-DMA, we could see price re-test support at 134.55. Support then comes in at 132.95. If price can rally past resistance at 136.35, we could see price test resistance at 137.875. There is a gap from the April 22nd low at 138.35 and the April 25th high at 136.85.
Boxed beef cutouts decreased as choice cutouts dropped 3.00 to 259.55 and select dipped 0.89 to 247.34. The choice/ select spread narrowed and is at 12.21 and the load count was 176.
Tuesday’s estimated slaughter is 126,000, which is above last week’s 125,000 and last year’s 122,000. Monday’s slaughter was revised lower to 111,000. The estimated total for the week (so far) is 237,000, which is below last week’s 250,000 and even with last year.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been limited on light demand in Nebraska, Colorado, and the Western Cornbelt. Not enough purchases for a market trend. Negotiated cash trading has been at a standstill in the Sothern Plains. Last week in the Southern Plains live purchases traded at 140.00. For the prior week in Nebraska live and dressed purchases traded at 146.00 and 232.00, respectively. Last week in Colorado live purchases traded from 146.00-147.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 145.00- 147.00 and at 232.00, respectively.
The USDA is indicating cash trades for live cattle from 144.00 – 146.00 and from 230.00 – 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, May 5, 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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