Walsh Trading Daily Insights
Commentary
December Lean Hogs opened higher and made the high and the low in the first 5 minutes of the session with the high at 74.50 and the low at 73.475. It consolidated the rest of the session settling near the high at 74.20. The high inched past resistance at 74.25 and the low was above support at 72.80, with price essentially consolidating the past two sessions in the lower end of Thursday’s break down session. If price can overtake the Monday high, we could see a test of resistance at 75.60. A failure from settlement could see price test support at 72.80.
The Pork Cutout Index decreased and is at 98.67 as of 10/22/2021.
The Lean Hog Index decreased and is at 83.70 as of 10/21/2021.
Estimated Slaughter for Monday is 478,000, which is above last week’s 472,000 and below last year’s 487,000. Friday’s slaughter was revised lower to 468,000, lowering the Weekly total to 2,598,000.
January Feeder Cattle opened strong as traders viewed the Cattle on Feed Report as bullish with price opening well above the Friday settlement and rallying to the session high at 160.50. The high was just short of resistance at 160.625 and the declining 50 DAM at 160.675. It turned lower for the rest of the session making the low late in the session at 158.425. The low was just below support at the 21 DMA at 158.575 and it settled right at the 21 DMA. If price can hold settlement, we could see a re-test of resistance. Resistance then comes in at 162.00. A failure below the 21 DMA could see price test support at the 157.92 – 157.30 support zone.
The Feeder Cattle Index increased and is at 155.89 as of 10/22/2021.
December Live Cattle gap opened higher on the excitement over the lower placement number than expected by analysts. Placements came in at down 3%which is lower than the average analysts guess at a plus 1.2%. The excitement was short lived however, as prices up ticked to the session high at 130.425 and then leaked lower the rest of the session, making the low at 129.40. It settled near the low at 129.525. The strong open took price near resistance at 130.45 and traders weren’t willing to push price higher as they await activity in the cash market. Mondays have been quiet on the cash front as producers come out with their show-lists and packers determine how they are going find the weakest link in the chain to buy cattle as cheaply as possible to set the tone for the week. Prices inched higher last week and slaughter levels were in the upper end of the range we’ve seen this year at 661,000. Slaughter is expected to remain in this area this week which could be beneficial for producers. These levels need to be maintained on a weekly basis to get cattle numbers current, in my opinion. Weights are rising and packers have been stretching the supply forward as much as possible, in my opinion. The decline closed the opening gap and set a negative tone in my opinion. If price can’t hold the session low, a test of support at 128.10 is possible. If price can hold settlement, we could revisit the Monday high.
Boxed beef cutouts were higher as choice cutouts increased 1.22 to 283.04 and select increased 0.08 to 263.19. The choice/ select spread narrowed to 19.85 and the load count was 136.
Monday’s estimated slaughter is 122,000, which is above last week’s 120,000 and last year’s 116,000.
The USDA report LM_Ct131 states: Thus far for Monday in the Southern Plains and Nebraska negotiated cash trading was at a standstill. In the Western Cornbelt negotiated cash trading was mostly inactive with very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 124.00. For the prior week in Nebraska and Western Cornbelt live and dressed purchases traded from 124.00-125.00 and at 196.00, respectively.
The USDA is indicating no cash trades for live cattle and 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 28, 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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