Walsh Trading Daily Insights
Commentary
October Lean Hogs broke down early in the trading session, testing support at 98.475 as the low was just above it at 98.625. The market recovered and rallied the rest of the session to the high at 100.825. This took out resistance at 100.075, as it also settled above it at 100.575. Cutout prices ended lower on Friday, putting some fear in traders’ minds that it has peaked. Cutouts surged in the morning, easing the panic and closed solid, which could be a positive catalyst for Tuesday. If settlement holds, we could move towards resistance at 101.975. Resistance then comes in at 104.35. A break down from settlement could see price re-visit support at 100.075 and a failure from here could see price test support at 98.475.
The Pork Cutout Index decreased and is at 123.32 as of 8/12/2022.
The Lean Hog Index ticked higher and is at 121.93 as of 8/11/2022.
Estimated Slaughter for Monday is 428,000, which is below last week’s 458,000 and last year’s 475,000. Friday slaughter was revised lower to 433,000 and Saturday slaughter was revised lower to be 23,000. The estimated total for the week is 2,325,000, which is below last week’s 2,332,000 and last year’s 2,408,000.
September Feeder Cattle opened on a strong note as corn was taking a beating. It traded to the session high at 185.30, drifted then fell apart, breaking down the rest of the session to the low at 182.70. The breakdown took price right to support at 182.70 and settlement was just above support at 183.00. Meanwhile, the rally took price past resistance at 184.375 and just under resistance at 185.80. These remain in place as strong levels for Feeders. Even with the breakdown in corn, Feeders were unable to overcome these levels. Feeders has basically been trading within the 185.80 and 182.70 resistance and support levels for the last seven trading sessions, with little spikes above and below them. The index has strengthened but so far bulls haven’t been able to push price past resistance. If Feeders can hold settlement, we could see price test resistance at 184.375 and then move towards resistance at 185.80. Resistance then comes in at 187.20. A failure from settlement could see futures test support at the 21-DMA at 181.775 and then 180.80. Support then comes in at 178.95.
The Feeder Cattle Index increased and is at 179.04 as of 8/12/2022.
October Live Cattle tried to rally early in the trading session, opening in positive territory and trading to the session high at 145.05. This is just under resistance at 145.225 and selling took over and pressured cattle the rest of the session to the low at 143.675. Settlement was near the low at 143.80. This is the third time price has failed at the 145.225 level and this time it fell below the key level at 144.025. Cash is expected to firm again this week, but futures traders tip-toed around this resistance, unsure that price can hold up in the cash market. If cattle can hold settlement, we could see price test resistance at 144.025 and then re-visit the 145.225 resistance level. A failure from settlement could see price once again pull back towards support at 142.225. Support then comes in at 140.175.
Boxed beef cutouts were higher as choice cutouts increased 1.09 to 264.46 and select rose 0.13 to 239.72. The choice/ select spread widened and is at 24.74 and the load count was 95.
Monday’s estimated slaughter is 124,000, which is above last week’s 119,000 and last year’s 118,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 140.00. For prior week in Nebraska live and dressed purchases traded from 144.00-148.00 and from 229.00-230.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded from 146.00-148.00 and at 229.00, respectively.
The USDA is indicating cash trades for live cattle at 146.00 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, August 18, 2022 at 3:00 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.