Walsh Trading Daily Insights
Commentary
December Lean Hogs continues to get pounded. It made another new low for the down move at 75.325. The low took price just below support at 75.60 and settlement was just above it at 75.825. The high came early at 77.25 as bulls made another weak attempt to take control and failed. The low and settlement keeps the lead contract in Hogs at its lowest levels since December 2021. The cash market continues to struggle as cash prices and cutouts continue to decline. Not good for Bulls. Sentiment in futures remains weak as the December contract is trading at an extreme discount to the October contract. Traders have exports before the open and await Thursday’s USDA quarterly Hogs and Pigs Report, which is expected to reflect continued herd contraction. Analysts on average expect USDA to show a 0.8% year-over-year decline in the hog herd as of Sept. 1. The breeding stock is expected to post a 0.4% drop, while marketing hogs are expected to be down 0.9%. The June-Aug pig crop is expected to be down 0.5%. A failure from the low could see price test support at 74.25. Support then comes in at 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 101.02 as of 9/27/2022.
The Lean Hog Index decreased and is at 96.41 as of 9/26/2022.
Estimated Slaughter for Wednesday is 484,000, which is even with last week and above last year’s 467,000. The weekly estimated total (so far) is 1,451,000 which is above last week’s 1,447,000 and last year’s 1,412,000.
November Feeder Cattle tried to rally at the open, opening strong but was unable to do anything with it. It ticked to the high at 176.625 and gave way, trading to the 175.025 low by mid-morning. Traders took the rest of the session off and it consolidated near the low to settle at 175.275. A failure from settlement could see support tested at 173.325. Support then comes in at 172.00. If price holds settlement, we could test resistance at the 100-DMA at 177.25. Resistance then comes in at 178.95.
The Feeder Cattle Index decreased and is at 177.46 as of 9/27/2022.
December Live Cattle opened higher, made the session high at 147.475 and then broke down to the session low at 146.075. It also took the rest of the session off, consolidated and settled near its low at 146.275. Cash prices weakened with packers getting a low 141.00 trade in the mix. Cattle was basically trapped within moving average resistance at the 13-DMA (147.525) and support at the 21-DMA (146.25). If settlement holds, we could test resistance at the rising 13-DMA now at 147.525. The 8-DMA is next at 148.95. A break down from the 21-DMA could see support tested at 145.225. The rising 50-DMA now at 144.70 is next. Support then comes in at 144.025.
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.
Wednesday’s estimated slaughter is 127,000, which is even with last week and above last year’s 118,000. The estimated total for the week (so far) is 380,000, which is below last week’s 382,000 and above last year’s 356,000.
The USDA report LM_Ct131 states: So far for Wednesday in Nebraska negotiated cash trading has been active on very good demand. Compared to last week live purchases traded steady from 144.00-145.00 and dressed purchases traded steady to 4.00 lower at 228.00, with a few up to 233.00. In the Western Cornbelt negotiated cash trading has been slow on moderate demand. A few live purchases traded from 144.00-145.00 and a few dressed purchases traded at 228.00. However, not enough live or dressed purchases for a full market trend. For the previous week live purchases traded from 145.00-148.00 and dressed purchases traded from 227.00-234.00. In the Texas Panhandle negotiated cash trading has been mostly inactive on light demand. In Kansas negotiated cash trading has been limited on light demand. However, not enough purchases in either region for a full market trend. Tuesday was the last reported live purchase market in the Southern Plains at 143.00.
The USDA is indicating cash trades for live cattle from 141.00 – 147.00 and from 225.60 – 233.00 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 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
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