Walsh Trading Daily Insights
Commentary
February Lean Hogs opened unchanged and broke down to the session low at 81.625, it recovered and grinded higher the rest of the session to the high at 83.375. It settled just off the high at 83.025. The breakdown took price just past support at 81.70 and the high was just above resistance at 83.325. Since taking over as the lead contract, February Hogs have been consolidating around the 83.325 level. A breakout above this level could see price move towards resistance at 85.325. A failure below settlement could see price revisit support and then possibly move towards support at 80.45.
The Pork Cutout Index decreased and is at 88.88 as of 11/19/2021.
The Lean Hog Index decreased and is at 73.46 as of 11/18/2021.
Estimated Slaughter for Monday is 480,000, which is even with last, week and below last year’s 501,000. Friday’s slaughter was revised lower to 473,000.
January Feeder Cattle opened lower and traded down to the low at 160.10. This is just below support at 160.625 and the 100 DMA at 160.25. Buying came in and lifted the market higher, reaching the high at 161.975. This is just below resistance at 162.00. It settled at 161.70. Price is once again consolidating between resistance at 162.00 and 160.625. It is expecting or hoping for a break out in the cash market, wanting to see the Feeder Cattle Index move to new highs. So far this hasn’t happened and the Index remains in its trading range from 156.56 – 152.79. A failure from settlement could see price retest moving average support at the 100 DMA at 160.25. Support then comes in at the 21 DMA at 158.825. A breakout above resistance at 162.00 could see price test the 163.50 resistance level.
The Feeder Cattle Index increased and is at 156.29 as of 11/19/2021.
February Live Cattle gap opened higher, made the low at 137.85 and rallied to the high of the day and a new high for the up move at 139.05. It settled nearby at 138.975. The rally created a gap from the Friday high at 137.775 and the Monday low and it busted through resistance at 137.875 and 138.60. Excitement over a strong cash market and a high slaughter level last week pushed the market over the edge into new price territory. Cattle futures haven’t been this high since March 2016. Expectations are for cash to continue higher into the new year as it appears packers need cattle and have been aggressive in procuring them. Last week saw packers pay up for cattle for a short slaughter week. This week they have a short purchase week to buy for a full slaughter week. Producers are finally starting to get the price action moving in their favor. The holidays are coming and packers have orders to fill and producers seem to be current in their marketing. Producers are now hoping for a run to 140.00 live in the cash market. Futures could help pave the way with this rally past resistance. Next target for the upside is resistance at 140.175. A failure from settlement could see price test support at 137.875. Support then comes in at 136.35.
Boxed beef cutouts were mixed as choice cutouts increased 0.84 to 279.25 and select decreased 0.10 to 263.73. The choice/ select spread widened to 15.52 and the load count was 124.
Monday’s estimated slaughter is 122,000, which is above last week’s 121,000 and last year’s 120,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been mostly inactive on very light demand in the Western Cornbelt. Not enough purchases for a market trend. Negotiated cash trading has been at a standstill in all other major feeding regions. Last week in the Southern Plains live purchases traded at 133.00. In Nebraska last week, live and dressed purchases traded from 133.00-134.00 and at 210.00, respectively. In the Western Cornbelt last week live and dressed purchases traded from 132.00-134.00 and at 210.00, respectively. In Colorado last week live purchases traded from 132.00- 135.00.
The USDA is indicating no cash trades for live cattle and at 212.00 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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