Walsh Trading Daily Insights
Commentary
October Lean Hogs opened strong, rallying to test resistance at 93.50, making the high just below it at 93.225. It failed and collapsed, trading down to the session low at 90.825, settling near the low at 91.075. Cash markets started the week on a strong note, setting up hope it would continue on Wednesday. It wasn’t to be however as cash hogs and cutouts were lower. The indices are reflecting this and have been in a steep decline. Cash ended the day with lower prices and exports will not be released this week due to USDA issues with a new procedure for reporting and tabulating the numbers. They are expected to try again for next week to report the results of the past couple weeks and the current numbers. We’ll see. If price can hold settlement, we could see price revisit resistance at 92.375 and then 93.50. If settlement fails, we could revisit support at 90.40 and then the Tuesday low. Support then comes in at 88.325.
The Pork Cutout Index increased and is at 102.76 as of 9/06/2022.
The Lean Hog Index decreased and is at 103.26 as of 9/05/2022.
Estimated Slaughter for Wednesday is 483,000, which is above last week’s 475,000 and below last year’s 477,000. The estimated total for the week (so far) is 968,000, which is below last week’s 1,435,000 and above last year’s 955,000.
October Feeder Cattle failed to hold resistance at 185.80 early in the trading session, making the high at 185.925 and then breaking down as Corn rallied to its high. Even as Corn turned south Feeders were unable to sustain a rally falling short of its high and breaking down to the session low at 183.75, settling near the low at 183.95. The break down took price just past the 8-DMA, now at 183.80, with settlement just above it. The Feeder Cattle Index has pulled back off its high and is back below 180.00 keeping pressure on futures, in my opinion. If price holds settlement, we could test resistance at 184.375 and then 185.80. Resistance then comes in at 187.20. If price falls below the 8-DMSA, we could pull-back and test support at 182.70. Support then comes in at 180.80.
The Feeder Cattle Index decreased and is at 179.14 as of 9/06/2022.
October Live Cattle stalled as futures once again failed to blow past resistance at 145.225, making the high just above it at 145.50. Price turned south and broke down to support at 144.025, making the low just above it at 144.15. It settled near the low at 144.25. Settlement puts trade in the middle of its 146.25 – 142.275 trading range. Producers held out for higher prices yesterday with packer bids rejected as cutout prices had rebounded, futures worked higher so they were expecting packers to be more aggressive in making purchases this week. It is a short week with the Labor Day holiday just behind us and a full week of slaughter for next week. It wasn’t to be (so far) as the weaker futures price action today had packers using this break down to get cash started for the week on a weaker note, with trades taking place lower than last week from 138.00 to 141.00. A rally past 145.225 could see price test the high of the range, with resistance above it at 146.875. A break down from 144.025 could see support tested at 142.225.
Boxed beef cutouts were mixed as choice cutouts increased 0.87 to 261.44 and select decreased 1.79 to 237.51. The choice/ select spread widened and is at 23.83 and the load count was 218.
Wednesday’s estimated slaughter is 128,000, which is above last week’s 125,000 and last year’s 122,000. The estimated total for the week (so far) is 258,000, which is below last week’s 373,000 and above last year’s 245,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading has been at a standstill in Kansas. In the Texas Panhandle, Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend in these regions. Last week in the Texas Panhandle live purchases traded at 141.00. In Kansas last week live purchases traded from 140.00-141.00. For the prior week in Nebraska live and dressed purchases traded from 143.00- 145.00 and from 228.00-230.00, respectively. In the Western Cornbelt for the previous week live and dressed purchases traded from 143.00-145.00 and from 228.00-232.00, respectively.
The USDA is indicating cash trades for live cattle from 138.00 – 141.00 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, September 08, 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.
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