Walsh Trading Daily Insights
Commentary
August Lean Hogs gap opened lower, traded to the session low at 103.45 and then reversed course and raced to the session high at 105.75, closing the opening gap in the process. The rally didn’t hold and price fell the rest of the session, settling near the low at 103.825. August Hogs are trading at a discount to the Lean Hog Index as traders are expecting summer doldrums and demand destruction for pork. The cash market remains strong for now but is not expected to remain strong going into the “meat” of the season. A failure from settlement could see price test support at 101.975. If price can reclaim 104.35, we could see price test the Tuesday high. Resistance then comes in at 106.85.
The Pork Cutout Index decreased and is at 110.57 as of 6/27/2022.
The Lean Hog Index increased and is at 111.35 as of 6/24/2022.
Estimated Slaughter for Tuesday is 450,000, which is below last week’s 468,000 and last year’s 463,000. Monday’s slaughter was revised lower to 458,000. The estimated total for the week (so far) is 908,000, which is below last week’s 917,000 and last year’s 918,000.
August Feeder Cattle opened lower and rallied to the session high at 173.95, then sold off the rest of the session to the low at 171.65. It settled near the low at 171.825. Corn was up all session, the Feeder Cattle Index was down from the prior session and Live Cattle futures is showing signs of faltering, which kept the pressure on Feeders. Settlement was below support at 172.00 and a failure from settlement could see futures work its way lower to test support at 169.95. If price can reclaim 172.00, we could see a test of resistance at 173.325. Resistance then comes in at 175.70.
The Feeder Cattle Index increased and is at 164.20 as of 6/27/2022.
August Live Cattle opened lower, tested support at 132.95 and then rallied to the session high at 134.15. This is just below resistance at the 50-DMA at 134.30 and price reversed course again and traded lower the rest of the session to the low at 132.60. It settled near the low at 132.725. The cash market is flat with prices so far trading within last week’s range. Traders are wary about demand, but so far demand seems to be in a good place but the fears remain. A failure from settlement could see price test support at 130.45. If price can reclaim resistance at 132.95, we could see price revisit the 50-DMA. Resistance then comes in at the 200-DMA at 135.95.
Boxed beef cutouts decreased as choice cutouts decreased 1.54 to 267.14 and select decreased 1.93 to 243.31. The choice/ select spread widened and is at 23.83 and the load count was 154.
Tuesday’s estimated slaughter is 126,000, which is even with last week and above last year’s 121,000. The estimated total for the week (so far) is 251,000, which is above last week’s 250,000 and last year’s 240,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been mostly inactive on light demand in Kansas, Nebraska and Western Cornbelt. In the Texas Panhandle and Colorado negotiated cash trading has been at a standstill. Not enough purchases for a market trend in any region. Last week in the Texas Panhandle live purchases traded at 138.00. In Kansas live purchases traded from 137.00-138.00. For the prior week in Nebraska live and dressed purchases traded from 145.00148.00 and at 234.00, respectively. In Colorado live purchases traded at 145.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 145.00-150.00 and 234.00-240.00, respectively.
The USDA is indicating cash trades for live cattle from 137.00 – 148.00 and nothing 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, June 30, 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
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