Walsh Trading Daily Insights
Commentary
July Lean Hogs behaved in a volatile way on Monday, taking out both Friday’s high and low and forming an outside candlestick. It settled lower from Friday’s settlement but above the Monday open. The price action took price below the declining 21-DMA now at 82.825 and the high was below resistance at 85.325. The range was 85.00 high to the 82.325 low, with settlement at 84.15. Continued uncertainty plus strong resistance up above restricted the advance and led to some consolidation. Cash markets are attempting to move higher, and traders seem to be eager to see that happen. The seasonality is upon us, and it is now or never for cash prices, in my opinion. A failure from settlement could see price pull-back and test support at 83.325. Support then comes in at the 21-DMA, then 81.70. A continuation higher off the session high could see price test resistance at 85.325. Resistance is nearby at the 100-DMA now at 85.825.
The Pork Cutout Index increased and is at 84.35 as of 6/02/2023.
The Lean Hog Index increased and is at 80.52 as of 6/01/2023.
Estimated Slaughter for Monday is 467,000, which is above last week’s 2,000 and below last year’s 473,000.
August Feeder Cattle consolidated within Friday’s trading range, making the high at 243.075 and the low at 241.025. It settled at 242.60. The cash index is strong, but futures are rich to cash, and this limited the price action in my opinion as corn prices, which were strong early, sank as the day wore on. A failure from settlement could see price test support at 240.375. Support then comes in at 238.35. If price takes out the Monday high, we could revisit the Friday high. A rally past the high could see price approach resistance at the all-time high on the continuous chart at 245.75.
The Feeder Cattle Index surged and is at 216.12 as of 6/02/2023.
August Live Cattle opened higher and traded to an all-time high on the continuous chart at 174.425, and then fell apart, trading lower to the low at 172.65. It settled near the low at 173.275. With cash on the sidelines as packers and producers readied their forces for battle, futures essentially consolidated Friday’s gains. Futures have come a long way in a short period of time, trading at a discount to the lowest region’s cash prices to essentially even to the lowest region. So, the new high was met by profit taking and price traded down to support at 172.75. Settlement was above support, which, in my opinion, is a positive for the price action. A failure to hold settlement could see a pull-back towards support at 172.65 and then move towards support at 170.375. If settlement holds, we could revisit the Monday high. Resistance then comes in (pivot analysis) at 175.25 and then 176.45.
Boxed beef cutouts were higher as choice cutouts surged 4.26 to 314.19 and select surged 5.80 to 296.73. The choice/ select spread narrowed and is at 17.46 and the load count was 98.
Monday’s estimated slaughter is 121,000, which is above last week’s 2,000 and below last year’s 123,000.
The USDA report LM_Ct131 states: So far for Monday in all regions negotiated cash trading has been at a standstill. The latest established market in all regions was last week. In the Texas Panhandle live purchases traded from 175.00-180.00. In Kansas live purchases traded from 178.00-180.00. In Nebraska live and dressed purchases traded from 183.00-189.00 and from 285.00-292.00, respectively. In the Western Cornbelt live and dressed purchases traded from 185.00-187.00 and from 288.00-292.00, respectively.
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, June 08, 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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