Walsh Trading Daily Insights
Commentary
October Lean Hogs made a weak attempt to rally on the open. It stalled with the high made at 101.175. Hogs broke down and traded lower, picking up steam as the day progressed, nearly going down limit and making the low at 96.30. Settlement was near the low at 96.575. Traders resumed their fears that hog supplies will surge and prices crash as we move towards the fall. Hog supplies normally increase into the fall as a slump in demand occurs due to school starting and grilling season winds down. This year is not normal in my opinion, as beef prices continue to be strong and both cattle and hog supplies are tight and could get tighter. Hog prices have not collapsed as many anticipated, as they are still near the high end of the range. Cash prices remain strong, but will have days where prices trade lower. The cash market was strong today, yet traders ignored that. Hogs are in short supply world-wide in my opinion, with cash prices strong in the 3 major hog producing area…. The US, Europe and China. The crash took price through support at 97.30 and the weak settlement could see price test support at 95.30. If price can hold settlement, we could test resistance at 97.30. Resistance then comes in at 98.475.
The Pork Cutout Index rose and is at 123.51 as of 8/15/2022.
The Lean Hog Index dipped and is at 121.71 as of 8/12/2022.
Estimated Slaughter for Tuesday is 476,000, which is above last week’s 474,000 and last year’s 471,000. Monday slaughter was revised higher to 442,000. The estimated total for the week is 918,000, which is below last week’s 932,000 and last year’s 946,000.
September Feeder Cattle surged as weakening corn prices emboldened bulls as price opened at the low (183.425) and surged all day to the high at 186.325. It pulled back into the close and settled at 185.475. What a difference a day can make, with Feeders closing near the low on Monday and near the high on Tuesday. It makes your head spin. The surge took price to a new high, but it still settled under resistance at 185.80. Feeders has basically been trading within the 185.80 and 182.70 resistance and support levels for the last eight trading sessions, with little spikes above and below them. Demand has been strong for feeder cattle and the index has strengthened but so far bulls haven’t been able to push price past resistance. If Feeders can rally pat the Tuesday high, we could see price test resistance at 187.20. Resistance then comes in at 188.95. A failure from settlement could see futures test support at 184.375. Support then comes in at 182.70.
The Feeder Cattle Index increased and is at 179.35 as of 8/15/2022.
October Live Cattle also raced higher as reports that packers were aggressive in placing bids in Nebraska at 151.00 made its way through the market. The bids were passed over. Aggressive packers this early in the week could indicate a need for cattle and maybe even more aggression as the week progresses. We’ll see! The rally took price to a new high at 145.85 and a strong settlement at 145.675. The low occurred at the opening price of 143.85. Settlement was above resistance at 145.225 which puts resistance at 146.825 in traders cross-hairs. A failure from 145.225 could see price pull back towards support at 144.025. Support then comes in at 142.225.
Boxed beef cutouts were mixed as choice cutouts increased 0.98 to 265.44 and select declined 0.60 to 239.12. The choice/ select spread widened and is at 26.32 and the load count was 161.
Tuesday’s estimated slaughter is 126,000, which is even with last week and above last year’s 122,000. Monday’s slaughter was revised lower to 121,000. The estimated total for the week (so far) is 247,000, which is above last week’s 245,000 and last year’s 240,000.
The USDA report LM_Ct131 states: So far for Tuesday in Nebraska negotiated cash trading has been limited on light demand. In the Southern Plains and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in any region 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
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