Walsh Trading Daily Insights
Commentary
July Lean Hogs opened higher, down ticked to the session low at 89.70 and then surged to the high of the day at 93.125. The took out resistance at 90.40 and 92.375, stalling just below resistance at 93.50. The stall turned in to a major pullback, taking price below the key level at 92.375 to settle at 91.60. The decline could have been a case of too far too fast and when price couldn’t move back towards the high, some profit taking probably took place. The index is rising but is still well below the futures, so the snap back is understandable, in my opinion. June expires on Wednesday and July will become both the lead and spot contract. We need to see some nice increases in the index, in my opinion to sustain the July futures price. If settlement holds, Hogs could test resistance at 92.375. The high and then 93.50 are next. If price can’t survive settlement, we could test support at 90.40. Support then comes in at 88.325.
The Pork Cutout Index increased and is at 86.61 as of 6/09/2023.
The Lean Hog Index increased and is at 84.28 as of 6/08/2023.
Estimated Slaughter for Monday is 467,000, which is even with last week and above last year’s 461,000. Saturday slaughter was revised higher to 53,000 and Friday’s slaughter was revised lower to 448,000. The estimated total for the week (so far) is now 2,358,000, which is above last week’s 2,028,000 and below last year’s 2,366,000.
August Feeder Cattle is under the auspices of a Bearish Engulfing Candlestick formation. Monday’s trade was uneventful as it traded within Friday’s trading range. The high was at 239.65, the low was 237.55 and settlement was at 239.05. Settlement was above the key level at 238.35 which is a positive for Feeders. The rising 21-DMA is important to the near-term direction of Feeder Cattle, in my opinion. It is now at 236.425. A failure below here could see price breakdown and test support at 235.95 and then 234.475. If settlement holds, it could test the 240.875 resistance level. If resistance at 240.875 is taken out, we could challenge resistance at 242.475 and then the 245.175 high. The all-time high (lead contract) on my continuous chart is nearby and stalled the rally at 245.75. We’ll see what happens if that is breached.
The Feeder Cattle Index surged and is at 226.18 as of 6/08/2023.
August Live Cattle is also operating under a Bearish Engulfing candlestick and Monday’s price action created a Bullish Engulfing Candlestick. The Bearish formation is likely stronger as it comes from an all-time high and the bullish one comes after a short pull back. However, we are in an uptrend. Let the battle commence. It opened lower, down ticked to the low at 171.30 and then rallied to the high at 173.60. It consolidated the rest of the session and settled near the high at 173.20. The rally took price past resistance at 172.75 (prior all-time high), which is a positive for bulls, in my opinion. Cash hasn’t started trading as both producers and packers are gearing up for this week’s war and are getting their ammo readied. If price can hold settlement, we could test resistance at 174.425. Resistance then comes in at 175.95. A failure below 172.75 could see price revisit the Monday low. Support then comes in at 170.375.
Boxed beef cutouts were higher as choice cutouts surged 4.20 to 337.43 and select surged 4.53 to 310.24. The choice/ select spread narrowed and is at 27.19 and the load count was 80.
Monday’s estimated slaughter is 125,000, which is above last week’s 121,000 and last year’s 120,000. Friday slaughter was revised lower to 115,000. The estimated total for the week (so far) is now 616,000, which is above last week’s 573,000 and below last year’s 671,000.
The USDA report LM_Ct131 states: So far for Monday in all regions negotiated cash trading was at a standstill. The latest established market was last week in all regions. In the Texas Panhandle live purchases traded at 185.00. In Kansas live purchases traded at 186.00. In Nebraska live and dressed purchases traded from 189.00-192.00 and at 300.00, respectively. In the Western Cornbelt live and dressed purchases traded at 190.00 and from 298.00-300.00, 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 15, 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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