Walsh Trading Daily Insights
Commentary
October Lean Hogs surged on Tuesday, opening strong and rallying all session to the high at 96.075. The low came early at 92.00 and settlement was near the high at 95.75. The rally took price past resistance at 95.30 and with settlement above it, resistance at 97.30 is now within traders’ crosshairs. Futures are now within a normal price relationship to the Lean Hog Index as the expected fall seasonal price rise comes into traders focus. Cash is still in decline mode but traders have been anticipating the price action early all summer, so why not for the fall. We’ll see!! If price can hold settlement, we could see price test resistance at 97.30. A failure below 95.30 could see price test support at 93.50.
The Pork Cutout Index increased and is at 103.73 as of 9/12/2022.
The Lean Hog Index decreased and is at 98.29 as of 9/09/2022.
Estimated Slaughter for Monday is 476,000, which is below last week’s 483,000 and last year’s 481,000. Monday’s slaughter was revised lower to 475,000. The weekly estimated total (so far) is 951,000, which is above last week’s 485,000 and even with last year.
October Feeder Cattle opened low, made the high at 183.125 and plummeted…. Breaking down below support at 180.80 to the low at 179.00. This is just above the 178.95 support level and it acted as a spring as futures bounced and settled at 180.525. Settlement was below support at 180.80, so sentiment leans down ward. A failure from settlement could see support revisited at 178.95. Support then comes in at 175.70. If price retakes 180.80, we could test resistance at 182.70 and then 184.375. Feeders showed weakness even with a slight decline in corn as Equity prices crashed as inflation came in hotter than expected in the CPI report.
The Feeder Cattle Index decreased and is at 180.06 as of 9/12/2022.
October Live Cattle tumbled as the CPI numbers came in hotter than expected, causing traders to fear (for the session) that no one will eat beef ever again, sending futures down to the session low at 144.525. This is just above the 21-DMA at 144.40 and price ticked higher to settle at 144.80. The high was at 145.70. The decline puts packers once again in the driver’s seat as cash has yet to get started. Expectations were for cash to trade steady to higher this week and if futures can’t turn around on Wednesday, packers may be successful in working prices lower. Cutout prices declined, giving more ammo to the packers, but the load count came in on the heavy side, indicating strong demand for beef. If settlement holds, we could revisit resistance at 145.225 and then work its way higher to test the Monday high at 146.10. A break down from the 21-DMA could see support tested at 144.025. Support then comes in at 142.225.
Boxed beef cutouts were lower as choice cutouts dropped 2.28 to 256.66 and select fell 2.18 to 233.58. The choice/ select spread narrowed and is at 23.08 and the load count was 172.
Tuesday’s estimated slaughter is 128,000, which is above last week’s 127,000 and last year’s 120,000. The estimated total for the week (so far) is 253,000, which is above last week’s 130,000 and last year’s 233,000.
The USDA report LM_Ct131 states: Thus far for Tuesday in the Southern Plains negotiated cash trading has been at a standstill. In Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 141.00. For the previous week in Nebraska live and dressed purchases traded from 142.00 -143.00 and at 226.00, respectively. In the Western Cornbelt for the prior week live and dressed purchases traded from 143.00-146.00 and from 225.00-230.00, respectively.
The USDA is indicating cash trades for live cattle at 143.00 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 15, 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.
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