Walsh Trading Daily Insights
Commentary
October Lean Hogs opened higher, made the high at 97.075 then broke down to the session low at 95.375. It bounced and settled at 96.225. Hogs have spent the past 4 sessions trading between resistance at 97.30 and support at 95.30. Since October became the lead contract it has traded between the low at 92.425 and the high at 97.875. Futures seem to be biding its time until hog supplies increase and cutouts and cash crash. It is not paying any mind to the current strength in these arenas and is looking forward. Pork demand has been excellent but traders don’t believe this will last into October. October is trading at a much wider than normal discount to the index. Packer margins are good as cutouts are soaring and producers are also hanging in there despite higher costs. 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 down ticked and is at 127.45 as of 8/01/2022.
The Lean Hog Index increased and is at 121.87 as of 7/29/2022.
Estimated Slaughter for Tuesday is 472,000, which is above last week’s 467,000 and last year’s 469,000. The estimated total for the week is 880,000, which is below last week’s 917,000 and last year’s 883,000.
September Feeder Cattle broke from the recent norm as both corn and feeders fell during Tuesday’s trading session. Feeders started off okay as it opened higher and grinded to the session high at 183.85. The market reversed course from here and traded down the rest of the session to the low at 181.275. It settled near the low at 181.45. It closed the gap and couldn’t rebound off of the closure. The gap is from the Friday high at 181.925 and the Monday low at 182.125. The break down approached support at 180.80, never challenging it. If feeders can hold settlement, we could revisit resistance at 182.70. Resistance then comes in at 184.375. A failure from settlement could see futures revisit support at 180.80. Support then comes in at 178.95.
The Feeder Cattle Index jumped and is at 174.74 as of 7/29/2022.
October Live Cattle continued its trade around the key level at 142.225. It opened lower and made the high at 142.625 and the drifted to the low of the day at 141.875. It settled at 142.125. Cattle continued in its lackluster trading as it waits for something to change in the cash market. If price can trade above 142.225, it could approach resistance at 144.025. A failure from settlement could see price pull back towards support at the rising 13-DMA now at 141.40. Support then comes in at 140.175.
Boxed beef cutouts were lower as choice cutouts fell 2.14 to 268.46 and select decreased 1.35 to 241.55. The choice/ select spread narrowed and is at 26.91 and the load count was 157.
Tuesday’s estimated slaughter is 124,000, which is below last week’s 125,000 and above last year’s 123,000. The estimated total for the week (so far) is 248,000, which is below last week’s 249,000 and above last year’s 240,000.
The USDA report LM_Ct131 states: For Monday negotiated cash trading in the Western Cornbelt negotiated cash trading has been slow on light demand. A few live purchases traded at 143.00. However, not enough purchases for a full market trend. For the previous week and dressed purchases traded from 141.00-145.00 and from 224.00-228.00, respectively. In the Southern Plains and Nebraska negotiated cash trading has been at a standstill. Last week in the Southern Plains live purchases traded at 135.00. For the prior week in Nebraska live and dressed purchases traded at 138.00 and at 225.00, respectively.
The USDA is indicating cash trades for live cattle at 143.00 and none 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
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