Walsh Trading Daily Insights
Commentary
April Lean Hogs opened higher, traded to the session high at 90.275 and then declined the remainder of the session, making the low at 86.80. It settled nearby at 87.15. The sell-off nearly took Hogs down limit and it completed a bearish evening star candlestick pattern at the top of a strong rally. The break down slid past support at 87.10 and settlement was just above support. A break down below 87.10 could see some more liquidation in Hogs. A failure from 86.80 could see support tested at 85.375. Support then comes in at 83.325. If Hogs can hold settlement, consolidation within the Friday range is possible. Cash has been rising, but futures are still very strong compared to the Lean Hog Index. We could see futures consolidate and cash catch up to the futures next week, in my opinion.
The Pork Cutout Index increased and is at 92.72 as of 2/25/2021.
The Lean Hog Index increased and is at 79.95 as of 2/24/2021.
Estimated Slaughter for Friday is 488,000 which is even with last week and above last year’s 483,000. The estimated slaughter for Saturday is expected to be 174,000, which is above last week’s 167,000 and last year’s 95,000. The weekly total is estimated to be 2,642,000, which is above last week’s 2,432,000 and last year’s 2,561,000.
April Feeder Cattle gap opened lower, rallied to the session high at 144.90 and then declined the rest of the day to the session low at 142.00. It settled at 142.575. Settlement is above the key level at 142.40. If price can hold settlement, we could see resistance re-tested at 143.50. Resistance then comes in at 144.25. A failure from 142.40 could see price test support at 140.775 and then 138.95.
The Feeder Cattle Index declined and is at 138.91 as of 2/25/2021.
April Live Cattle opened lower, traded to the session high at 121.75 and then traded down the rest of the session making the low at the end of the day at 119.775. It settled at 120.00. The break down in cattle took price below the key level at 120.80 and this should key trade for Monday. If futures can overtake this level, a move toward resistance at 121.90 is possible. Resistance then comes in at 122.825. A failure from settlement could see support tested at 119.375 and then move towards support at 117.80. The February contract expired and futures are high compared to cash prices. We need to see strength in cash prices or futures may continue to fall, in my opinion.
Boxed beef cutouts were higher as choice cutouts rose 0.14 to 240.53 and select rose 0.94 to 229.73. The choice/ select spread narrowed to 10.80 and the load count was 59.
Friday’s estimated slaughter is 119,000, which is above last week’s 109,000 and last year’s 115,000. Saturday slaughter is estimated to be 64,000, which is above last week’s 63,000 and last year’s 27,000. The total for the week is estimated to be 666,000, which is above last week’s 552,000 and last year’s 628,000.
The USDA report LM_Ct131 states: Thus far for Friday negotiated cash trading in the Southern Plains has been slow on light demand with live purchases steady compared to last week at 114.00. In Nebraska and the Western Cornbelt negotiated cash trading has been limited on light demand with a few live purchases in Nebraska at 114.00, however not enough purchases in either region for a full market trend. The last reported market in either region was on Thursday with live and dressed purchases at 114.00 and 182.00 respectively.
The USDA is reporting trades for live cattle at 113.00 to 115.00 and 178.50 – 182.00 for dressed cattle so far for Friday. The USDA shows the range at 112.25 – 117.00 for live cattle so far this week and today’s trading in dressed is the range 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 Friday, March 5, 2021 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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