Walsh Trading Daily Insights
Commentary
June Lean Hogs continued higher on Tuesday, trading up to 87.35 with the low at 86.075 and settlement at 87.20. The rally and settlement took price past resistance at 87.10, putting the 50-DMA now at 87.75 in traders’ crosshairs. Cash market improvement as the seasonal rally has arrived is providing bullish futures traders with hope that the bad times are behind them. Futures are still well above cash so cash has to keep on trucking, in my opinion or futures could come tumbling down. If futures take out the 50-DMA we may see a test of resistance at 88.325. A pullback could see price revisit the 100-DMA now at 86.375. Support then comes in at 85.325.
The Pork Cutout Index increased and is at 82.87 as of 5/15/2023.
The Lean Hog Index increased and is at 76.50 as of 5/12/2023.
Estimated Slaughter for Tuesday is 470,000, which is above last week’s 451,000 and below last year’s 476,000. Monday’s slaughter was revised lower to 464,000. The estimated total for the week (so far) is 934,000, which is above last week’s 919,000 and below last year’s 943,000.
August Feeder Cattle crept higher, rallying to 231.80 on Tuesday with the low at 230.80 and settlement near the high at 231.475. It was a narrow range candle which could set off a bigger move up or down. A rally past the high could see price test the April 28th high at 232.225. Resistance then comes in at 233.10. A failure from settlement could see price test support at 231.175. A continuation lower could see price come down to test support at 229.825. Support then comes in at 228.05 – 227.80.
The Feeder Cattle Index down ticked and is at 202.07 as of 5/15/2023.
August Live Cattle is the lead contract as its volume has surpassed the volume of the June contract. It made the high at 162.95 and the low at 162.225. Settlement came in at 162.475. The high was just below resistance at the 8-DMA on the continuous chart at 163.00. The low was just above support at the 50-DMA on the continuous chart at now at 162.20. Settlement was below the key level at 162.725. Cash has been at a standstill so far this week and cutout prices have been falling. The Choice cutout fell below 300.00 on Tuesday. The showlist was flat when it was expected to rise and packers slaughtered more cattle last week than they have in a while. With the breakdown in cutouts lead to packers pulling back on slaughter once again, especially with the showlist not higher? Producers believe that packers are short bought for this week and analysts are saying packers aren’t in need of cattle because they haven’t participated in the market yet. We’ll see who is right as the week drags on. Futures are just whittling away until it gets some direction from cash or if outside markets take the lead. A failure below the 50-DMA could see price test support at 161.75. Support then comes in at 160.75. A rally past the high could see price test resistance at the declining 21-DMA now at 163.65. Resistance then comes in at 164.90.
Boxed beef cutouts were lower as choice cutouts fell 2.51 to 299.47 and select declined 0.36 to 284.35. The choice/ select spread narrowed and is at 15.12 and the load count was 136.
Tuesday’s estimated slaughter is 127,000, which is below last week’s 128,000 and even with last year. The estimated total (so far) for the week is 253,000, which is below last week’s 254,000 and above last year’s 250,000.
The USDA report LM_Ct131 states: Thus far Tuesday negotiated cash trade has been at a standstill in all major feeding regions. Not enough purchases in any feeding region for an adequate market test. The latest established market was last week with live purchases in the Southern Plains at 170.00. Last week in Nebraska, live purchases traded mostly at 176.00 with dressed purchases at 280.00. For the prior week in the Western Cornbelt, live purchases traded from 175.00-177.00 with dressed purchases at 280.00 on a light test.
The USDA is indicating no cash trades for live cattle and 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, May 18, 2023 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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