Walsh Trading Daily Insights
Commentary
December Lean Hogs recouped most of Tuesday’s decline rallying off the early low at 74.50 to the high at76.05. It settled near the high at 75.95. The rally did little technically, in my opinion as all it did was form an inside candlestick, staying within the Tuesday trading range. The positive aspect is it settled above resistance at 75.60 and held support down at 74.25. Export sales are out before the Thursday open and could affect the price action on Thursday. If price can hold settlement, Hogs could challenge resistance at 76.75 and the declining 21 DMA now at 76.775. Resistance then comes in at 77.80. A failure below settlement could see price test support at 74.25. Support then comes in at 73.325.
The Pork Cutout Index down ticked and is at 94.19 as of 11/02/2021.
The Lean Hog Index dipped and is at 79.04 as of 11/01/2021.
Estimated Slaughter for Wednesday is 480,000, which is even with last week and below last year’s 487,000. The estimated slaughter for the week (so far) is 1,431,000, which is below last week’s 1,438,0000 and last year’s 1,470,000.
January Feeder Cattle kept on swinging on Wednesday, delivering another knockdown blow, gapping higher on the open and rallying to the session high at 160.15. It took a breather after meeting fierce resistance at the rising 100 DMA now at 159.60 and the 160.625 resistance level, pulling back and settling below the 100 DMA at 159.225. Weakening corn prices and anticipation of rising cash prices created the positive sentiment, in my opinion. The 100 DMA and the 160.625 is in a critical area for Feeders as price has revolved around this area. If Feeders came overcome resistance at 160.625, a test of resistance at 162.00 is possible. A failure from settlement could see price revisit support at the 156.92 – 157.30 zone.
The Feeder Cattle Index decreased and is at 155.65 as of 11/02/2021.
December Live Cattle gapped open higher above the 130.45 resistance level and never looked back, rallying to the session high at 132.40. The low was at 130.625 and settlement was at 131.65. Cash prices are moving in favor of producers, reaching 129.00 on the mandatory reporting report. Packers are chasing and this bodes well for producers going forward. It looks like the average cash price will rise again this week and this is emboldening bulls leading to strength in the futures market, in my opinion. If price can over take the Wednesday high, we could see price test the August 24th high at 132.85 when the October contract was the lead contract, Resistance is next door at 132.95. A failure from settlement could see price test the gap from Wednesday’s low to the Tuesday High at 130.425.
Boxed beef cutouts were higher as choice cutouts increased 1.11 to 288.49 and select increased 1.59 to 267.72. The choice/ select spread narrowed to 20.77 and the load count was 140.
Wednesday’s estimated slaughter is 122,000, which is even with last week and above last year’s 120,000. The estimated total for the week (so far) is 365,000, which is below last week’s 366,000 and above last year’s 362,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited on light demand in all major feeding regions. Not enough purchases in any region for a full market trend. The last reportable market in the Southern Plains was on Tuesday with live purchases at 128.00. Last week in Nebraska live and dressed purchases traded at 127.00 and at 200.00, respectively. In the Western Cornbelt last week live and dressed purchases traded from 126.00-127.00 and at 200.00, respectively.
The USDA is indicating cash trades for live cattle from 126.00 – 129.00 and from 200.00 – 202.00 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, November 4, 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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