Walsh Trading Daily Insights
Commentary
December Lean Hogs opened higher from Monday’s settlement. It ended up as the session high (66.30) and then broke down making the low at 64.90. This is just above support at 64.80 and the rising 50 DMA at 64.775. December Hogs are still consolidating with the high at 67.60 and the low at 64.10. A break down below the Tuesday low could see the consolidation low tested and a failure below there could see support at 63.325 tested. Support then comes in at 61.80. If support holds, a test of the Monday high and trendline resistance at 66.675 is possible. Resistance then comes in at 67.80.
The Pork Cutout Index increased and is at 84.13 as of 11/9/2020.
The Lean Hog Index up-ticked and is at 71.13 as of 11/6/2020.
Estimated Slaughter for Tuesday is 493,000 which is even with last week and last year. The weekly total (so far) is 986,000, which is even with last week and above last year’s 937,000.
January Feeder Cattle made a new high for the up move early in the trading session reaching 141. 50 and then a bullish USDA report for corn sent Feeders down to the session low at 139.35. Feeders’ however, was able bounce off the low and settled in the middle of the trading range at 140.40. It formed a spinning top candlestick indicating indecision in the market after yesterday’s big rally. It settled above trendline resistance (140.275 for Tuesday) and if Feeders can stay above the downward sloping trendline (140.125) on Wednesday a test of resistance at 142.40 is possible. Resistance then comes in at 143.50 and then 144.25. The bullish Wolfe Wave pattern is in full swing and the objective for the pattern is now at 148.225. A breakdown below the trendline could see price test support at 138.95, the 100 DMA (138.875) and then 136.75.
The Feeder Cattle Index rose and is at 135.85 as of 11/9/2020.
December Live Cattle made the low at 111.40 early and ran up to the high at 112.30 which is a new high for the up move and just below resistance at 112.35. Price then drifted the rest of the session and settled at 111.875. This resistance level stopped cattle when December first took over as the lead contract and as the contract nears the end of its life as the lead contract, it looks like it will be a tough level for price again. Resistance is at 112.35, 113.90 and then 114.65. Support is at 110.80, 109.60 and then 108.65.
Boxed beef cutouts surged with choice cutouts up 4.86 to 222.25 and select up 6.18 to 208.55. The choice/ select spread narrowed to 13.70 and the load count was 136.
Tuesday’s estimated slaughter is 120,000, which is below last week’s 121,000 and even with last year. The weekly Total (so far) is 237,000, which is below last week’s 240,000 and above last year’s 232,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been at a standstill in the 5 Area Feeding Region. Last week in the Southern Plains and Nebraska live purchases traded at 107.0000 and dressed purchases, in Nebraska, traded at 167.00. For the prior week in the Western Cornbelt live and dressed purchases traded from 105.00-106.00 and 164.-167.00, respectively.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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 12, 2020 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
www.walshtrading.com
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (WTI) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.