Walsh Trading Daily Insights
Commentary October Lean Hogs is now the lead contract as its volume has exceeded the volume of the August contract. It gap opened higher, pulled back and closed the gap, making the low at 94.45. It reversed direction and rallied the remainder of the session to the high at 96.20. It settled near the high at 96.025. Due to the seasonal aspect of hog market, October is trading at a steep discount to the current Lean Hog Index. It is normal to assume the cash market will and therefore the index will decline into October as the supply and weights of hogs is expected to increase into this time period. Resistance is at 97.30 and then 98.475. Support is at 95.30 and 93.50.
The Pork Cutout Index jumped and is at 121.27 as of 7/19/2022.
The Lean Hog Index increased and is at 115.91 as of 7/18/2022.
Estimated Slaughter for Wednesday is 459,000, which is above last week’s 454,000 and below last year’s 470,000. The estimated total for the week (so far) is 1,368,000, which is above last week’s 1,344,000 and below last year’s 1,396,000.
August Feeder Cattle opened higher and rallied to the session high at 179.65, then grinded lower to the low at 177.625. It settled near the low at 177.825. The breakdown dipped into the gap from the Monday high at 177.225 to the Tuesday low at 177.775. The rally took price past resistance at 178.95 and it couldn’t be sustained. The price action formed an outside day candlestick. If settlement holds, we could revisit resistance at 178.95. Resistance then comes in at 180.80 and the July 13th high at 181.00. A failure from settlement could see futures move towards closing the gap. Support then comes in at 175.70.
The Feeder Cattle Index down ticked and is at 172.42 as of 7/19/2022.
October Live Cattle opened lower, made the low at 140.85 and then rallied to the high at 141.80. It consolidated the rest of the session and settled in the middle of the range at 141.325. Support is at 140.175 and resistance is at 142.225. A failure from settlement could see price re-test support. Support then comes in at 138.60. If price can overtake the high, we could test resistance at 142.225.
Boxed beef cutouts fell as choice cutouts decreased 2.04 to 270.53 and select decreased 1.48 to 242.25. The choice/ select spread narrowed and is at 28.28 and the load count was 119.
Wednesday’s estimated slaughter is 124,000, which is below last week’s 126,000 and above last year’s 118,000. The estimated total for the week (so far) is 374,000, which is below last week’s 377,000 and above last year’s 351,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been slow on light demand in Nebraska with live purchases 1.00 to 3.00 lower from 139.00-142.00 and dressed purchases 3.00 lower at 227.00 when compared to last week. Negotiated cash trading in the Southern Plains and the Western Cornbelt has been limited on light demand, not enough purchases for a market trend. On Tuesday in the Texas Panhandle live purchases traded at 136.00. Last week in Kansas live purchases traded at 137.00. In the Western Cornbelt last week live and dressed purchases traded from 143.50-145.00 and from 228.00-230.00, respectively.
The USDA is indicating cash trades for live cattle from 133.50 – 143.50 and from 224.00 – 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, July 21, 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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