Livestock Report

Ben DiCostanzo General Commentary Leave a Comment

                                                                                   Walsh Trading Daily Insights

Commentary

February Lean Hogs opened lower and made the session low at 64.725 in the opening minutes of trade. It quickly recovered and rallied to the early high at 65.95. It consolidated at the high end of the range and made a new high at the end of the session at 66.00. It settled near the high at 65.90. The back month Hogs, however couldn’t settle in positive territory as export worries into next year weighed on traders. The recovery off the opening kept the Feb Hogs in the middle of the trading range (67.60 high to the low at 63.60) on the continuous chart. There is trendline resistance at 66.325 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. Weakness persists in cutouts and the cash hog market after a long run of high prices.

The Pork Cutout Index fell and is at 81.05 as of 11/17/2020.

The Lean Hog Index declined and is at 69.73 as of 11/16/2020.

Estimated Slaughter for Wednesday is 494,000 which is above last week’s 454,000 and last year’s 493,000. The weekly total (so far) is 1,464,000, which is above last week’s 1,440,000 and below last year’s 1,484,000.

January Feeder Cattle opened lower and kept on going down. It gave back all of Tuesday’s gains and then some. Strong grain prices kept bulls at bay and bearish traders took advantage. Feeders broke down and traded to support at the 50 DMA at 136.80, making the low right there. It settled nearby at 137.30. It once again broke down below the 100 DMA (139.24) and the downward sloping trendline at 139.325. Price refuses to pull away from these levels and a trading range is in effect from the 141.50 high to the 136.725 low. We are back to the low of the range and a breakdown below the 50 DMA could lead to lower prices. Taking out the 50 DMA and the November 16 low at 136.725 could see a pullback to test support at 134.25 and then 132.075. If the 50 DMA can hold, a recovery towards the middle of the trading range is likely.

The Feeder Cattle Index down-ticked and is at 137.38 as of 11/17/2020.

February Live Cattle consolidated within Tuesday’s trading range forming an inside candlestick. It was a tight range with the high at 113.90 (resistance level) and the low at 112.875. This is just above support at 112.35. It settled near the low at 113.15. Cash prices dragged and live cattle traded today between 106.00 and 111.00. Packers continue to control the markets as cutouts continue to strengthen and they laugh all the way to the bank. Worries about grain prices and demand continue to be the narrative in the market. 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. Resistance is at 113.90 and then 114.65. Support is at 112.35 and then 110.80.

Boxed beef cutouts were mixed with choice cutouts up 2.12 to 235.84 and select down 0.34 to 213.62. The choice/ select spread widened to 22.22 and the load count was 142.

Wednesday’s estimated slaughter is 119,000, which is above last week’s 115,000 and even with last year. The weekly Total (so far) is 359,000, which is above last week’s 352,000 and last year’s 358,000.

The USDA report LM_Ct131 states: Thus far for Wednesday in the Southern Plains negotiated cash trading and demand has been moderate. Compare to last week live purchases moved stead at 110.00. So far for Wednesday in Nebraska and Western Cornbelt negotiated cash trading has been limited on light demand. In Nebraska a few live purchases traded at 110.00 and in the Western Cornbelt a few live purchases traded at 106.00. However, not enough purchases for a full market trend in either region. Last week in Nebraska live and dressed purchases traded at 110.00 and 172.00, respectively. 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

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 19, 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.

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**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

bdicostanzo@walshtrading.com

www.walshtrading.com

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