Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, tested resistance at 93.50, making the high just below it at 93.375 and then traded down the rest of the session to the low at 91.00. A bounce at the close saw it settle at 91.525. Continued cash market weakness put pressure on futures, in my opinion. Recessionary fears has led to futures traders to keep excessive pressure on futures prices as futures are trading at a steeper discount to the cash market than normal for this time of year. Traders must be expecting consumers to forgo eating pork into the fall and holiday season and eat the newly crowned protein of the month .….. bugs …insects as the fake stuff has fallen out of favor. The break down led to a settlement below support at 92.375 and puts support at 90.40 in traders cross-hairs. Support then comes in at the August 24th low at 90.00. If price can reclaim 92.375, we could see price revisit resistance at 93.50. Resistance then comes in at the Tuesday high at 94.40.
The Pork Cutout Index decreased and is at 102.50 as of 8/30/2022.
The Lean Hog Index declined and is at 109.36 as of 8/29/2022.
Estimated Slaughter for Wednesday is 475,000, which is below last week’s 480,000 and above last year’s 475,000. The estimated total for the week (so far) is 1,435,000, which is below last week’s 1,438,000 and above last year’s 1,422,000.
October Feeder Cattle gap opened higher and made the high of the day at 184.10. It couldn’t sustain its success as it failed just above the 8-DMA at 184.05 and broke down to the low at 182.90 even as corn maintained its weakness all session. It consolidated and settled at 183.475. The low was just above support at 182.70 and price was able to stabilize just above it. 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 re-test resistance at the 8-DMA and then 184.375. Resistance then comes in at 185.80. If price breaks down below 182.70, we could test support at 180.80. The rising 50-DMA now at 180.125 is next.
The Feeder Cattle Index up-ticked and is at 183.04 as of 8/30/2022.
October Live Cattle opened lower and made the session high at 143.875. It broke down from here and traded to the session low at 142.275. It drifted and settled near the low at 142.575. The high is just below resistance at 144.025 and the low was just above support at 142.225. This is a new low for the recent down move as traders are looking for cash to sag. Packers are buying for a short-kill week. Beef cutouts have also been in decline this week and have broken down below 260.00. Packers will attempt to force lower cash prices to maintain their margin and futures are reflecting this reality, in my opinion. A break down below support could see price work its way down and test support at 140.175. If settlement holds, we could move towards resistance at 144.025.
Boxed beef cutouts were lower as choice cutouts decreased 1.45 to 258.34 and select declined 1.94 to 237.74. The choice/ select spread widened and is at 20.60 and the load count was 156.
Wednesday’s estimated slaughter is 125,000, which is above last week’s 124,000 and last year’s 119,000. The estimated total for the week (so far) is 373,000, which is below last week’s 375,000 and above last year’s 356,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading in Nebraska and Western Cornbelt has been slow on light demand. In Nebraska Tuesday was the last reported live purchase market at 145.00. Not enough dressed purchases in Nebraska for a market trend. For the prior week dressed purchases traded at 232.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 147.00-148.00 and from 232.00-234.00, respectively. In the Southern Plains negotiated cash trading has been at a standstill. Last week in the Southern Plains live purchases traded at 142.00.
The USDA is indicating cash trades for live cattle from 142.00 – 145.00 and from 227.00 – 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, September 01, 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.