Commentary
February Lean Hogs made a new high for the up-move, reaching 69.60 before turning lower and breaking down to the session low at 68.05. The high is just below resistance at 69.80 and the low is just above support at 67.80. Settlement was at 68.75 which is right at a key level and it formed a Doji candlestick, indicating indecision in this area. If price can hold settlement, we could see a re-test of the Monday high. A breakout above 69.80 could see resistance tested at70.90. Resistance then comes in at 71.80. A breakdown below settlement could see support re-tested at 67.80 and then 66.55.
The Pork Cutout Index rose and is at 78.51 as of 11/30/2020.
The Lean Hog Index declined and is at 66.81 as of 11/27/2020.
Estimated Slaughter for Tuesday is 493,000 which is below last week’s 497,000 and last year’s 496,000. The weekly estimate (so far) is 990,000, which is below last week’s 994,000 and last year’s 992,000.
January Feeder Cattle made the low in the opening minutes at 141.05, then surged, eventually reaching the high of the day at 143.475, which is just under resistance at 143.50. It couldn’t handle success and crashed, trading down to the lows and then inching upwards to settle at 141.65. It made a shooting star candlestick formation, which could lead to a test of support if the Monday low is broken through. Support comes in at 140.775 and then the 100 DMA at 139.57. If settlement holds, a retest of the Monday high is possible. Resistance then comes in at 144.25 and 145.05.
The Feeder Cattle Index jumped and is at 138.89 as of 11/27/2020.
February Live Cattle is consolidating. It traded in a tight range with the high at 113.90 (right at resistance) and the low at 112.70 (just above support at 112.35). It settled at 113.175. Cattle has formed a ledge with the high at 114.70 and the low at 112.45. A breakout above the high could see resistance tested at 116.55. Resistance then comes in at 117.80. A break down below the low could see support tested at 110.80. Support then comes in at 109.60.
Boxed beef cutouts were mixed with choice cutouts down 0.28 to 243.40 and select up 0.65 to 223.08. The choice/ select spread narrowed to 20.32 and the load count was 130.
Tuesday’s estimated slaughter is 122,000, which is even with last week and last year. The weekly estimate (so far) is 241,000, which is below last week’s 242,000 and even with last year.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading in Nebraska and the Western Cornbelt has been mostly inactive on very light demand with a few live purchases in Nebraska at 110.00. Negotiated cash trading has been at a standstill in the Southern Plains. Not enough purchases in any region for a full market trend. Last week in the Southern Plains live purchases traded at 111.00. For the prior week in Nebraska live and dressed purchases traded from 110.00-111.00 and at 174.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded from 109.00-110.00 and from 172.00-174.00, respectively.
The USDA is reporting live trades from 107.00 – 110.00 and dressed at 172.00 (so far).
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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