Walsh Trading Daily Insights
Commentary
August Lean Hogs gap opened lower, closed the gap at the session high at 108.55 and collapsed! It broke down the rest of the session to the low at 103.575 and it settled near the low at 103.675. It settled below support at 104.35, keeping pressure on the market. Recession …. Recession …. Recession was the cry heard throughout the commodity markets and prices collapsed in response to those cries. The livestock markets were not immune to those cries as Hogs and Live Cattle suffered losses. There are fears consumers won’t eat during the recession as gasoline prices take most of their spending money, leaving nothing for food. In my opinion, people will still eat, and pork will still be prominent in the food make up. Cash is still strong as packers need to purchase hogs to fill orders. Hog weights have come down and supplies are still limited so packers are still aggressive. Chicken prices are at high levels and I think consumers will look to pork and beef over the high-priced chicken. The summer is here and many are saying hog supplies will increase in a slowing demand season. We’ll see!! I price can reclaim 104.35, we could see price move higher and approach resistance at 106.85. A failure from settlement could see price test support at 101.975.
The Pork Cutout Index increased and is at 111.86 as of 6/22/2022.
The Lean Hog Index increased and is at 110.74 as of 6/21/2022.
Estimated Slaughter for Thursday is 465,000, which is below last week’s 466,000 and last year’s 472,000. The estimated total for the week (so far) is 1,851,000, which is below last week’s 1,867,000 and last year’s 1,886,000.
August Feeder Cattle was the bright spot in the livestock complex, rallying as corn prices were collapsing. It opened higher and rallied to the session high at 175.875, then pulling back and trading to the session low at 173.45. A recovery into the end of the session saw price settle at 174.85. The rally took price past resistance at 175.70 and the pullback took price to just above support at 173.325. A break down from settlement could see price revisit support at 173.325. Support then comes in at 172.00. If settlement holds, we could see yet another test of resistance at 175.70. Resistance then comes in at the June 9th high at 176.875.
The Feeder Cattle Index ticked higher and is at 165.23 as of 6/22/2022.
August Live Cattle opened higher and traded to the session high at 135.80. This is just below resistance at the 200-DMA at 135.825 and with hogs faltering and outside markets in a freefall, cattle broke down and traded through support at 134.55 to the low at 133.275. It settled at 133.875. The cash market traded in a wide range on /Thursday, from 136.00 to as high as 150.00. But with commodity markets in peril, cattle futures were sold too, ignoring the steady price action in the cash market as cash prices have been trading at those levels on a consistent basis. A failure from settlement could see price test support at 132.95. Support then comes in at 130.45. If price can overtake resistance at 134.55, we could see price revisit the 200-DMA. Resistance then comes in at 136.35.
Boxed beef cutouts decreased as choice cutouts decreased 1.91 to 264.66 and select decreased 1.05 to 244.94. The choice/ select spread narrowed and is at 19.72 and the load count was 104.
Thursday’s estimated slaughter is 122,000, which is below last week’s 127,000 and above last year’s 118,000. The estimated total for the week (so far) is 498,000, which is above last week’s 495,000 and last year’s 473,000.
The USDA report LM_Ct131 states: So far for Thursday in Nebraska negotiated cash trading and demand were moderate. Compared to last week live purchases traded steady to 3.00 higher from 145.00-148.00 and dressed purchases traded 4.00 higher at 234.00. In the Western Cornbelt negotiated cash trading has been slow to moderate with moderate demand. Compared to the last reported live purchase market on Wednesday live trades moved 2.00-3.00 higher at 150.00. A few dressed purchases traded at 238.00, not enough for a full market trend. Wednesday saw dressed purchases from 238.00-240.00. Thus far for Thursday in Kansas and Colorado negotiated cash trading has been slow on light demand. In Kansas live purchases traded steady to 4.00 lower at 137.00, when compared to the last reported market on Wednesday. In Colorado live purchases traded steady at 145.00, when compared to last week. In the Texas Panhandle negotiated cash trading has been mostly inactive on light demand. Not enough purchases for a market trend. Wednesday was the last reported market with live purchases at 137.00.
The USDA is indicating cash trades for live cattle from 136.00 – 150.00 and from 228.00 – 240.00 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 Friday, June 24, 2022 at 2:00 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.
tested support at the
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.