Walsh Trading Daily Insights
Commentary
February Lean Hogs continued its consolidation, trading in the upper part of the 66.90 – 63.00 trading range. Monday’s high was 66.40 and its low was 65.10. Settlement was at 65.925. The Hog market hasn’t been able to take advantage of the bullish engulfing pattern established with the December 11th and 14th trading sessions. Pushing through the 66.90 consolidation range high could be the catalyst needed to turn the sentiment in the market. A rally above 66.90 could see resistance tested at 67.80 and then 68.75. If price can’t hold settlement, we could see price fall back and test support at 64.80 and then 63.325.
The Pork Cutout Index fell and is at 74.06 as of 12/18/2020.
The Lean Hog Index declined and is at 63.72 as of 12/17/2020.
Estimated Slaughter for Monday is 487,000 which is below last week’s 489,000 and last year’s 496,000.
March Feeder Cattle opened lower and tested support early in the session at 140.775, making the low just above it at 141.025. It rallied the rest of the day, making the high at 143.375 and it settled at 143.125. The high is just below the 143.475 high established when the January contract was the lead contract. If Feeders can’t take this high out, a pullback to the 100 DMA (139.34) is possible. Resistance is at the 143.475 high, 144.25 and then 145.05. Support is at 142.40, 140.775, the 100 DMA and then 138.95.
The Feeder Cattle Index jumped and is at 139.56 as of 12/18/2020.
February Live Cattle opened lower and rallied to a new high at 115.20. It pulled back and settled at 114.65. This is right at support and could be the key to trade on Tuesday. If settlement holds price could test the Monday high and then resistance at 116.55. Resistance then comes in at 117.80. If settlement fails a re-test of support at 113.90 and then 112.35 is possible. Support then comes in at 110.80. Cutout prices were firm and could be signaling the start of a seasonal rally in cutouts which could support the cash market. The Cattle-on-Feed report came out on Friday neutral to the analyst expectations but with a lower placement number already being guessed for December could signal better days are ahead for producers in 2021.
Boxed beef cutouts were higher with choice cutouts up 2.29 to 210.92 and select up 2.99 to 197.26. The choice/ select spread narrowed to 13.66 and the load count was 110.
Monday’s estimated slaughter is 119,000, which is below last week’s 120,000 and above last year’s 117,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading in the 5 Area Feeding Regions has been at a standstill. Last week in the Southern Plains live purchases traded at 108.00. For the prior week in Nebraska and Western Cornbelt live and dressed purchases traded at mostly 105.00 and 165.00, respectively.
The USDA is reporting live trades at a standstill for Monday (so far). The weekly range for last week is live trades from 102.00 – 108.00 and dressed 161.00 – 169.50.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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, December 31, 2020 at 1:00 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
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www.walshtrading.com
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