Walsh Trading Daily Insights
Commentary
April Lean Hogs opened strong and took out resistance at 87.10 on its way to a limit up move to the session high at 88.35. It wasn’t able to sustain the limit move and settled nearby at 87.925. Reports of ASF in China has traders rethinking the China narrative that it has its hog population under control and increasing its numbers to pre-ASF levels. It is now coming out that China has had a wave of sickness over the past few months and it has hit its herd in a severe manner. Also, ASF continues to make its way around the world as South Africa and Malaysia reports cases of the disease. Keep up your vigilance hog farmers, we obviously must keep this disease away from the US. The limit up move took price up to resistance at 88.325. Settlement was below it. If Hogs can overtake resistance, a move towards resistance at 90.40 is possible. A failure from settlement could see support at 87.10 re-visited. China will sell another 10,000MT of pork from its reserves this week.
The Pork Cutout Index increased and is at 93.63 as of 3/02/2021.
The Lean Hog Index increased and is at 82.63 as of 3/01/2021.
Estimated Slaughter for Wednesday is 497,000 which is even with last week and above last year’s 496,000. The weekly total (so far) is estimated to be 1,487,000, which is above last week’s 1,483,000 and last year’s 1,484,000.
April Feeder Cattle opened lower and traded to the session low at 139.675. It found support at the rising 50 DMA at 139.71 and with corn feeling some heat reversed course and rallied the remainder of the day to reach the high at 141.60 at the end of the session. It settled nearby at 141.30. The rally and settlement took price past resistance at 140.775. If price can hold settlement, we could see resistance re-tested at 142.40. Resistance then comes in at 143.50. A failure from support at 140.775 could see price re-test support at 138.95.
The Feeder Cattle Index declined and is at 137.17 as of 3/02/2021.
April Live Cattle opened lower and traded in a tight range, consolidating within Tuesday’s range. Wednesday’s range was 119.825 to 119.075. It settled at 119.40. It traded on both sides of the rising 50 DMA (119.35) and was able to settle above it. If price can hold above the 50 DMA, a test of resistance at 120.80 is possible. 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 the 50 DMA could see support tested at 117.80. Cash continues to lag futures, unable to move higher. If this continues, futures will move towards cash, in my opinion as they are over 6 handles above cash when they normally range around 2 handles above cash.
Boxed beef cutouts fell as choice cutouts decreased 1.65 to 233.03 and select declined 1.93 to 224.24. The choice/ select spread widened to 8.79 and the load count was 120.
Wednesday’s estimated slaughter is 121,000, which is even with last week and below last year’s 122,000. The total for the week (so far) is estimated to be 364,000, which is above last week’s 342,000 and below last year’s 369,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading and demand has been light to moderate in the Southern Plains with live purchases steady compared to last week at 114.00. In Nebraska, negotiated cash trading has been light on moderate demand with dressed purchases 2.00 lower compared to last week at 180.00, and a few live purchases at 114.00 however not enough live purchases for a full market trend. The last reported live market was last week at 114.00. In Colorado negotiated cash trading has been limited on light demand with live purchases at 114.00. In the Western Cornbelt negotiated cash trading has been limited on light demand with a few dressed purchases at 180.00, however not enough purchases for a full market trend. Last week in the Western Cornbelt live purchases traded at 114.00 and dressed purchases traded at 182.00.
The USDA is reporting trades at 110.00 – 114.25 on a live basis and 179.00 – 180.50 on a dressed basis so far this week.
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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.