Walsh Trading Daily Insights
Commentary
February Lean Hogs made another attempt to break out above resistance at 83.325 on Friday, trading up to 83.725 for the Friday high. It couldn’t hold on to the gains, breaking down the rest of the session to the low at 82.375. It settled at 82.475. If settlement holds, we could once again revisit resistance at 83.325. A breakout above the Friday high could see price move towards resistance at 85.325. A failure below settlement could see price revisit the Wednesday low (82.125) and then possibly move towards support at 80.45.
The Pork Cutout Index decreased and is at 89.80 as of 11/18/2021.
The Lean Hog Index decreased and is at 75.26 as of 11/17/2021.
Estimated Slaughter for Friday is 479,000, which is below last week’s 480,000 and last year’s 487,000. Thursday’s slaughter was revised lower to 475,000. Saturday slaughter is expected to be 233,000, which is below last week’s 262,000 and last year’s 284,000. The weekly estimated total (so far) is 2,635,000, which is above last week’s 2,614,000 and below last year’s 2,727,000.
January Feeder Cattle drifted higher early in the trading session, making the high at 162.075, which is just above resistance at 162.00 and then trading down to the session low at 160.75. The low is just above support at 160.625. It consolidated the rest of the session and settled at 160.925. A failure from settlement could see price retest moving average support at the 100 DMA at 160.20. Support then comes in at the 21 DMA at 158.60. A breakout above resistance at 162.00 could see price test the 163.50 resistance level. The Cattle on Feed numbers are below. It came in line with expectations, in my opinion.
The Feeder Cattle Index increased and is at 155.65 as of 11/18/2021.
February Live Cattle crept higher in front of the Cattle on Feed Report reaching 137.775 for the Friday high. The high is just below resistance at 137.875, with settlement nearby at 137.70. Traders continue to get excited over cash prices as they made another high at 135.00. It is anticipated to continue higher going forward and futures are reflecting that expectation in my opinion. A breakout above resistance could see price test the 138.60 resistance level. A failure from settlement could see price move towards support at 135.35.
Boxed beef cutouts were higher as choice cutouts increased 2.25 to 278.47 and select increased 0.67 to 263.83. The choice/ select spread widened to 14.58 and the load count was 103.
Friday’s estimated slaughter is 121,000, which is above last week’s 115,000 and last year’s 116,000. Saturday slaughter is expected to be 69,000, which is above last week’s 58,000 and below last year’s 73,000. The estimated total for the week (so far) is 677,000, which is above last week’s 655,000 and last year’s 666,000.
The USDA report LM_Ct131 states: Thus far for Friday negotiated cash trading has been limited on light demand in all major feeding regions with a few live purchases in Nebraska at 135.00, however not enough purchases in any region for a market trend. Thursday was the last reported market in any region. In the Southern Plains live purchases traded at 133.00. In Nebraska and the Western Cornbelt live and dressed purchases traded from 133.00-134.00 and 210.00, respectively. The last reported market in Colorado was last week with live purchases at 132.00.
The USDA is indicating cash trades for live cattle from 127.00 – 135.00 and from 204.00 – 211.00 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, December 2, 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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