Walsh Trading Daily Insights
Commentary
October Lean Hogs surged early in the trading session, racing to the session high at 96.975. By 9:25 AM it was over and done with. The market broke down the rest of the session to the low at 92.575. A small bounce at the close saw it settle at 92.90. The bullish patterns (Morning-star and a bullish engulfing candlestick pattern) helped ignite the rally along with a strong start to the cash hog market. But somebody must have discovered consumers turned against eating bacon this morning as the pork belly component of the carcass value collapsed by a little over 47 bucks, leading to a collapse in the morning carcass cutout. It was down over 11 bucks and seasonal price fears reared its ugly head once again. Tuesday’s breakdown didn’t take out the Friday low so, the bullish patterns are still in place but ever so gingerly. The rally failed just under resistance at 97.30 and it settled below support at 93.50. Follow-through to the downside could take futures below support at 92.375 and challenge the August 19th low at 91.90. Below here cancels the patterns and continue the short-term down trend. Support then comes in at 90.40. If price can hold settlement, we could see price revisit resistance at 95.30. Resistance then comes in at 97.30.
The Pork Cutout Index decreased and is at 118.96 as of 8/22/2022.
The Lean Hog Index declined and is at 119.98 as of 8/19/2022.
Estimated Slaughter for Tuesday is 480,000, which is above last week’s 476,000 and last year’s 473,000. The estimated total for the week (so far) is 958,000, which is above last week’s 918,000 and last year’s 912,000.
October Feeder Cattle opened lower at the high of the day at 185.70 and broke down to the low of the day at 183.75 by mid-morning. It bounced and settled at 184.45. Surging corn prices had Feeders reeling but it was able to find support at the rising 21-DMA now at 183.90. If corn continues its run higher, we could see more pressure on Feeders. A breakdown from the 21-DMA could see price test support at 182.70. Support then comes in at 180.80. If price holds settlement, we could test resistance at 185.80. Resistance then comes in at 187.20.
The Feeder Cattle Index down ticked and is at 180.60 as of 8/22/2022.
October Live Cattle traded lower early in the trading session to the session low at 143.95. This is just below support at 144.025 and bulls came back and rallied price to the session high at 145.25. This is just above resistance at 145.225 and it pulled back to settle at 144.60. Trade is stuck within its 146.25 – 143.675 trading range. A rally past 145.225 could sees price test the high of the range, with resistance above it at 146.875. A break down from the Tuesday low could see the low of the range tested. Support then comes in at 142.225.
Boxed beef cutouts were mixed as choice cutouts fell 1.72 to 262.80 and select rose 0.44 to 238.80. The choice/ select spread narrowed and is at 24.00 and the load count was 152.
Tuesday’s estimated slaughter is 126,000, which is even with last week and above last year’s 120,000. The estimated total for the week (so far) is 251,000, which is above last week’s 247,000 and last year’s 237,000.
The USDA report LM_Ct131 states: So far for Tuesday in the Southern Plains and Western Cornbelt negotiated cash trading has been slow on light demand. In the Southern Plains, compared to last week, live purchases traded steady to 1.00 higher at 142.00. In the Western Cornbelt a few live purchases traded at 148.00. In Nebraska negotiated cash trading has been mostly inactive on very light demand. Not enough purchases in the Western Cornbelt and Nebraska for a full market trend. For the previous week in the Western Cornbelt live and dressed purchases traded from 148.00-150.00 and at 234.00, respectively. For the prior week in Nebraska live and dressed purchases traded from 146.00-148.50 and at 234.00, respectively.
The USDA is indicating cash trades for live cattle from 138.00 – 149.00 and from 232.00 – 234.00 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 25, 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.