Walsh Trading Daily Insights
Commentary
December Lean Hogs reversed course and traded to the lower end of the trading range on Tuesday. The range is from the Monday high at 79.475 to the Thursday low at 77.25. Tuesday’s range is 78.75 to 77.275 with settlement near the low at 77.40. We still have the the tiny gap in place from 77.25 to 77.20. If the low falls and the gap is closed, we could see price test support at 76.75. Support then comes in at 75.60. If settlement holds, we could see a re-test of resistance at 78.80. Resistance then comes in at 79.80.
The Pork Cutout Index decreased and is at 103.24 as of 10/18/2021.
The Lean Hog Index decreased and is at 86.88 as of 10/15/2021.
Estimated Slaughter for Tuesday is 478,000, which is above last week’s 477,000 and below last year’s 490,000. Monday’s slaughter was revised lower to 472,000. The estimated total for the week is 950,000, which is below last week’s 954,000 and last year’s 967,000.
January Feeder Cattle rallied during the 1st hour of trading, taking price to the session high at 161.225. It was just above the declining 50 DMA at 161.125 and price failed from here. It broke down the rest of the session and traded down to the 100 DMA (159.075), making the low just below it at 158.925. It settled just above the 100 DMA at 159.225. If price can’t stay above the 100 DMA, we could test support at the rising 21 DMA at 158.325. Support then comes in at the 157.30 – 157.92 area. If settlement holds, we could see resistance re-tested at 160.626 and then the 50 DMA.
The Feeder Cattle Index increased and is at 154.10 as of 10/18/2021.
December Live Cattle continues its consolidating in the upper end of its 131.075 – 125.00 trading range. Tuesday’s trading range was 131.125 – 129.875. Settlement was near the low at 130.025. The range was outside Monday’s trading range forming an outside candlestick. Price is now revolving around the key level at 130.45. Trading above and below it and going nowhere. Cash is expected to trade higher this week, but so far it has not shown the ability to move out of its trading range. This is being reflected in the futures market. If price fails to hold settlement, we could see support at 128.10 re-visited. If price can overtake the Tuesday high, a test of resistance at 132.95 is possible.
Boxed beef cutouts were higher as choice cutouts increased 0.79 to 280.88 and select increased 1.72 to 261.53. The choice/ select spread narrowed to 19.35 and the load count was 147.
Tuesday’s estimated slaughter is 121,000, which is above last week’s 120,000 and below last year’s 123,000. The estimated total for the week is 241,000, which is even with last week and below last year’s 242,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been mostly inactive on light demand in the Texas Panhandle and Nebraska. In the Western Cornbelt negotiated cash trading has been limited on light demand. In Kansas negotiated cash trading has been at a standstill. Not enough purchases in any of these regions for a market trend. Last week in the 5 Area feeding regions live purchases traded at 124.00. For the prior week in Nebraska and Western Cornbelt dressed purchases traded at 196.00.
The USDA is indicating cash trades for live cattle from 123.00 to 125.00 and at 196.00 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, October 21, 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
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