Walsh Trading Daily Insights
Commentary
December Lean Hogs continues to get pounded. It took another one to the chin and was knocked down to a new low for the down move at 76.125. The low took price just below support at 76.175 and settlement was just above it at 76.25. The high came early at 80.575 as bulls made a weak attempt to fight back. The low and settlement puts the lead contract in Hogs at its lowest levels since December 2021. The cash market continues its fall from grace as cash prices and cutouts continue to decline. The indices are dropping and are expected to be lower on Wednesday. Not good for Bulls. Sentiment in futures remains weak as the December contract is trading at an extreme discount to the October contract. The spread settled at 12.45 with October over. A failure from support could see price test support at 75.60 and then 74.25. If price can hold settlement, we could test resistance at 77.80. Resistance then comes in at 78.80.
The Pork Cutout Index decreased and is at 102.47 as of 9/26/2022.
The Lean Hog Index decreased and is at 96.99 as of 9/23/2022.
Estimated Slaughter for Tuesday is 483,000, which is below last week’s 485,000 and above last year’s 471,000. The weekly estimated total (so far) is 967,000 which is above last week’s 963,000 and last year’s 945,000.
November Feeder Cattle tried to rally at the open, trading above resistance at the 100-DMA at 177.25 to the high at 177.55. The rally quickly gave way and plummeted to the low at 175.20 by mid-morning. It consolidated and settled in the middle of the range at 176.275. Strong corn took price down, in my opinion as corn rallied early and then as it pulled back Feeders gained some footing. The cash market also a problem as the Feeder Index has been in decline mode the past two days. Traders must be getting a bit nervous with the Feeder market as Feeders are trading in line with the cash market as opposed to a steep premium to cash in the recent past. We’ll see! A failure from settlement could see support revisited at 175.70. Support then comes in at 173.325. If price holds settlement, we could re-test resistance at the 100-DMA. Resistance then comes in at 178.95.
The Feeder Cattle Index decreased and is at 177.82 as of 9/26/2022.
December Live Cattle opened higher, made the session high at 148.05 and then broke down, trading to the session low at mid-morning at 146.40. It consolidated the rest of the session and settled at 146.90. Early strength in Equities buoyed Cattle, and as weakness took over /equities, it also leaked over to Cattle. Recession fears are building and demand worries persist. With these fears lingering, it is looking more likely cash prices could dip this week as packers encourage this sentiment. Cutouts are weaker so packers remain determined to maintain their margins. Once again… We’ll see! Settlement was above support at 146.825. If it holds, we could test resistance at the rising 13-DMA now at 147.475. The 8-DMA is next at 148.85. A break down from support could see support tested at the rising 21-DMA now at 146.10. Support then comes in at 145.225.
Boxed beef cutouts were mixed as choice cutouts rose 0.59 to 248.43 and select dropped 2.14 to 221.21. The choice/ select spread widened and is at 27.22 and the load count was 171.
Tuesday’s estimated slaughter is 128,000, which is even with last week and above last year’s 119,000. The estimated total for the week (so far) is 253,000, which is below last week’s 255,000 and above last year’s 238,000.
The USDA report LM_Ct131 states: So far for Tuesday in the Southern Plains negotiated cash trading has been slow on moderate demand. A few early live purchases have traded steady at 143.00 when compared to last week. In Nebraska and Western Cornbelt negotiated cash trading has been inactive on light demand. Not enough purchases in these regions for a market trend. For prior week in Nebraska live and dressed purchases traded from 144.00-145.00 and from 228.00-232.00, respectively. In the Western Cornbelt for the previous week live and dressed purchases traded from 145.00-148.00 and from 227.00-243.00, respectively.
The USDA is indicating cash trades for live cattle from 143.00 – 145.00 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 29, 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.