Commentary
February Lean Hogs is the lead contract as its volume has overtaken the December contract’s volume. It opened at the low of the day (64.05) and a strong rally took it to the high of the day at 65.80. It consolidated at the high end of the range and settled near the high at 65.625. This rally puts price back into the middle of the trading range (67.60 to the low at 63.60) on the continuous chart. There is trendline resistance at 66.375 and resistance 66.55 that needs to be broken so price can challenge the trading range high. If it can’t punch through here a move to the lower end of the range is likely.
The Pork Cutout Index declined and is at 82.11 as of 11/16/2020.
The Lean Hog Index dropped and is at 70.08 as of 11/13/2020.
Estimated Slaughter for Tuesday is 493,000 which is even with last week and below last year’s 498,000. The weekly total (so far) is 970,000, which is below last week’s 986,000 and last year’s 991,000.
January Feeder Cattle surged and traded above 140.00 to make the high at 140.425. It settled at 139.725. It once again settled above the 100 DMA (139.575) and trendline resistance at 139.45. The high was below resistance at 140.775 and price must recapture this level and the November 10 high at 141.50 to keep the rally humming along. A rally past the high could see resistance tested 142.40 and then 143.50. A failure to do so could set up a larger retracement for feeder Cattle. Taking out the November 16 low at 136.725 could see a pullback to test support at 134.25 and then 132.075
The Feeder Cattle Index down-ticked and is at 137.55 as of 11/16/2020.
February Live Cattle is now the lead contract as its volume is above the December contract. Feb took over on Monday and continued the way of the December contract. It opened above 112.35 resistance, traded to the high at 113.00 and was dragged back below it to the session low at 111.825. Tuesday however was a different story. It opened above the key level and made the low at 112.05. It traded both sides of this level the first couple of hours and then a strong morning cutout figure sent price on a bullish run and price ran all the way past resistance at 113.90 to the session high at 114.425. It settled below resistance at 113.575. The cutout rally is being attributed to strong retail demand as people are preparing for shut-downs and are beginning to stock up and aggressively purchase meat to store in their freezers. If cutouts remain strong cash should be able to join in the rally a trade at higher prices. Let’s hope producers get the much-needed rally in cash prices! Resistance is at 113.90 and then 114.65. Support is at 112.35 and then 110.80.
Boxed beef cutouts were surged with choice cutouts up 6.77 to 233.72 and select up 1.61 to 213.96. The choice/ select spread widened to 19.76 and the load count was 142.
Tuesday’s estimated slaughter is 121,000, which is above last week’s and last year’s 120,000. The weekly Total (so far) is 240,000, which is above last week’s 237,000 and last year’s 239,000.
The USDA report LM_Ct131 states: So far for Tuesday in the Texas Panhandle negotiated cash trading has been limited on light demand. Early live purchases moved steady at 110.00 when compared to last week. Thus far for Tuesday in Kansas and Western Cornbelt negotiated cash trading was mostly inactive on light demand. In Nebraska negotiated cash trading was at a standstill. Not enough purchases in these regions for a market trend. Last week in Kansas and Nebraska live purchases traded at 110.00 and dressed purchases, in Nebraska, traded at 172.00. For the prior week in the Western Cornbelt live purchases traded from 108.00-110.00 and dressed purchases traded at 172.00.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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Ben DiCostanzo
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Walsh Trading, Inc.
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