Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, traded down to the session low at 95.50 and reversed course, rallying the rest of the session to the high at 97.375. It settled near the high at 97.225. The rally failed yet again to overtake resistance at 97.30, as trade couldn’t sustain the high with settlement below resistance. The low approached support at 95.30 and it held so that is positive. But the October contract has established a trading range since becoming the lead contract with the low at 92.425 and the high at 97.875. It is in the upper end of the range and that is also positive, in my opinion. Cash hogs dropped since making a high in the low 130’s on Wednesday. It would be helpful for Hogs if the cash consolidates near the highs and then pops once again. A pullback will put pressure on futures, in my opinion as traders will assume supply is rebounding and resuming its normal seasonal pattern. This year is anything but normal, so we will have some interesting trading going forward as traders try to find the path of least resistance. A break out above 97.30 could see price test resistance at 98.475. Resistance then comes in at 100.075. A break down from settlement could see price test support at 95.30. Support then comes in at 93.50.
The Pork Cutout Index increased and is at 127.22 as of 7/28/2022.
The Lean Hog Index increased and is at 120.58 as of 7/27/2022.
Estimated Slaughter for Friday is 437,000, which is above last week’s 435,000 and above last year’s 424,000. Saturday’s slaughter is expected to be 9,000, which is below last week’s 41,000 and last year’s 14,000. The estimated total for the week is 2,291,000, which is above last week’s 2,285,000 and below last year’s 2,313,000.
September Feeder Cattle was all about corn on Friday, in my opinion. Corn was strong overnight and was firm on the open. Feeders responded by gap opening lower and breaking down below support at 178.95 to the low at 178.275. Corn started to waver from its highs and Feeders found support. As corn broke down from its high, Feeders rallied. It continued the rest of the session as breaking corn inspired traders. It rallied to the high at 181.925, dipping into the close to settle at 181.55. The high and settlement was above resistance at 180.80. This is a positive for the market. It formed an outside day candlestick and it settled near the high, also showing a bullish lean. But the rally was all about corn, so as corn goes feeders could follow. If settlement holds, we could test resistance at 182.70. Resistance then comes in at 184.375. A failure from 180.80 could see futures revisit support at 178.95.
The Feeder Cattle Index decreased and is at 172.31 as of 7/28/2022.
October Live Cattle opened higher and traded down to the low of the day at 141.425. It turned around and rallied to the session high at 142.575. It settled near the high at 142.225. Cattle continued in its lackluster trading, pivoting around and settling at the key level at 142.225. A rally past the Friday high could see price work its way higher and approach resistance at 144.025. A failure from settlement could see price pull back towards support at the rising 13-DMA now at 140.45. Support then comes in at 140.175.
Boxed beef cutouts were higher as choice cutouts increased 1.47 to 269.24 and select increased 1.44 to 242.25. The choice/ select spread widened and is at 26.99 and the load count was 74.
Friday’s estimated slaughter is 124,000, which is above last week’s 119,000 and last year’s 113,000. Saturday’s slaughter is expected to be 50,000, which is above last week’s 49,000 and below last year’s 56,000. The estimated total for the week is 669,000, which is above last week’s 665,000 and above last year’s 646,000.
The USDA report LM_Ct131 states: So far for Friday in the Western Cornbelt negotiated cash trading has been slow on light to moderate demand. A few live purchases traded from 144.00-145.00. However, not enough purchases for a full market trend. Wednesday was the last reported market with live and dressed purchases from 141.00 -145.00 and from 224.00-225.00, respectively. In the Southern Plains and Nebraska negotiated cash trading has been mostly inactive on light demand. Not enough purchases in any of these regions for a market trend. Wednesday was the last reported market in Nebraska with live and dressed purchases at 138.00 and at 225.00, respectively. Wednesday was the last reported market in Kansas with live purchases at 135.00. Tuesday was the reported market in the Texas Panhandle with live purchases at 135.00.
The USDA is indicating cash trades for live cattle from 134.00 – 146.00 and from 213.00 – 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, August 04, 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.