Walsh Trading Daily Insights
February Lean Hogs consolidated within Monday’s breakout candle. It traded down to trendline support at 66.075, making the low just below it at 66.00. It rebounded and settled at 66.75. The session high was 67.625. This is just below resistance at 67.80. A breakout above 67.80 could see the Monday high retested and then the 68.75 resistance level. Resistance then comes in at 69.80. A breakdown below the trendline (66.025) could see the 21 DMA tested at 65.77. The 50 DMA is just below it at 65.56. Support then comes in at 64.80.
The Pork Cutout Index declined and is at 78.26 as of 11/23/2020.
The Lean Hog Index declined and is at 67.83 as of 11/20/2020.
Estimated Slaughter for Tuesday is 497,000 which is above last week’s 493,000 and last year’s 490,000. The weekly estimate (so far) is 994,000, which is above last week’s 970,000 and last year’s 983,000.
January Feeder Cattle opened higher and traded up to resistance at the 100 DMA (139.33), making the high at 139.575. It pulled back and settled at 138.60. It settled just shy of the downward sloping trendline resistance at 138.75 and resistance at 138.95. So, this proved to be too tough for Feeders to overcome and with Wednesday a lame turkey session, we could continue to see some consolidation around these levels. Wednesday will have the trendline at 138.625. The surge and strong settlement on Monday created a bullish morning star candlestick formation. A breakout past the 100 DMA could see price test resistance at 140.775. A failure from settlement could see price consolidate.
The Feeder Cattle Index rose and is at 137.12 as of 11/23/2020.
February Live Cattle continued higher, trading just past resistance at 114.65 to the session high at 114.70. It pulled back to settle at 113.95. Settlement is just above resistance at 113.90. If settlement holds a retest of the high is possible. A breakout above the high could see price test resistance at 116.55. If price fails to hold settlement, a pullback to support at 112.35 is possible.
Boxed beef cutouts were higher with choice cutouts up 2.70 to 244.30 and select up 2.23 to 219.71. The choice/ select spread widened to 24.59 and the load count was 161.
Tuesday’s estimated slaughter is 122,000, which is above last week’s 121,000 and last year’s 109,000. The weekly estimate (so far) is 242,000, which is above last week’s 240,000 and last year’s 229,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading in the Southern Plains and Nebraska has been at a standstill. In the Western Cornbelt negotiated cash trading has been limited on very light demand. Not enough purchases for a market trend. Last week in the Southern Plains and Nebraska live purchases traded at 110.00 and dressed purchases, in Nebraska traded at 172.00. For previous week in the Western Cornbelt live purchases traded mostly at 109.00 and dressed purchases traded at 172.00.
The USDA is reporting live trades from 109.00 – 110.00 and dressed at 172.00 (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 Wednesday, November 25, 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.**
Senior Market Strategist
Walsh Trading, Inc.
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