Walsh Trading Daily Insights
Commentary
August Lean Hogs is now the lead contract as its volume has surpassed the volume of the July contract. August Hogs gap opened higher and rallied to an early high, then reversing course, closing the gap and trading to the session low at 91.05. Price turned higher and rallied the rest of the session to the high at 93.375. It settled near the high at 93.20. The cash market is gaining strength with both cutouts and cash hogs climbing as both the grilling season is here and the looming July 1st deadline for the enactment of proposition 12 is on the horizon. It could be the grocery and restaurant industries are buying in front of the deadline to secure product. I believe businesses are unsure what will happen after prop 12 goes into effect and are preparing for the worst. This has encouraged futures traders and the markets have taken off. The rally stopped shy of resistance at 93.50 so this remains an important hurdle for the August contract. A rally above 93.50 could see price move towards resistance at 95.30. A failure from settlement could see price test support at 92.375. Support then comes in at 90.40.
The Pork Cutout Index increased and is at 91.34 as of 6/19/2023.
The Lean Hog Index increased and is at 88.21 as of 6/16/2023.
Estimated Slaughter for Tuesday is 469,000, which is below last weeks and last year’s 470,000. The estimated total for the week (so far) is 928,000, which is above last week’s 927,000 and last year’s 919,000.
August Feeder Cattle is under the auspices of a Bearish Engulfing Candlestick formation. It continued its breakdown on Tuesday as strong corn and weakening cash put Feeders’ feet to the fire. The high came in at 235.85, the low at 231.875 and settlement at 232.15. Settlement was below the key level at 233.10 which puts 231.175 as the next level for Feeders to test. A breakdown below here could see price test support at 229.825. A recovery that takes price above resistance at 233.10, could put price on a path to test resistance at 234.475 and then 235.95.
The Feeder Cattle Index declined and is at 222.68 as of 6/19/2023.
August Live Cattle is also operating under a Bearish Engulfing candlestick and Tuesday’s trade took price down to support at the rising 21-DMA, now at 169.60. The session low was at 169.425 with the high at 171.975 and settlement at 169.70. This is a key level for cattle, and it held, giving cattle a chance for a bounce. If the 21-DMA holds, we could test resistance at 170.375. Resistance then comes in at the declining 8-DMA now at 171.80. A failure below the 21-DMA, could see price test support at 168.825. Support then comes in at 166.975. Cash weakened last week with packers able to take price down a few notches. Trade has not taken place in a big way and prices traded were lower. This is not a positive development as cutouts have declined and packers are determined to keep their margins as best they can.
Boxed beef cutouts were lower as choice cutouts collapsed 3.23 to 336.91 and select fell 2.83 to 307.93. The choice/ select spread narrowed and is at 28.98 and the load count was 121.
Tuesday’s estimated slaughter is 127,000, which is above last week’s 126,000 and below last year’s 128,000. The estimated total for the week (so far) is 253,000, which is above last week’s 248,000 and last year’s 249,000.
The USDA report LM_Ct131 states: Thus far for Tuesday in the Texas Panhandle and Nebraska negotiated cash trading has been at a standstill. In Kansas and Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough purchases for a market trend. The latest established market was last week in all regions. In the Southern Plains live purchases traded at 182.00. In Nebraska live and dressed purchases traded from 185.00-189.00 and at 296.00, respectively. In the Western Cornbelt live and dressed purchases traded from 186.00-188.00 and from 294.00-300.00, respectively.
The USDA is indicating cash trades for live cattle from 177.00 – 184.00 and at 290.00 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, June 22, 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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