Commentary
February Lean Hogs surged from the opening bell and rallied to the session high at 65.85. It came close to going limit up, and settled strong at 65.675. It formed a bullish engulfing candle and follow-through buying could see price revisit resistance at 66.55 and then 67.80. If price can’t hold settlement, we could see price fall back and test support at 64.80 and consolidate within the Monday range. There is a tight gap from the 12/3/2020 low at 66.725 and the 12/4/2020 high at 66.70 close.
The Pork Cutout Index rose and is at 78.42 as of 12/11/2020.
The Lean Hog Index declined and is at 65.35 as of 12/10/2020.
Estimated Slaughter for Monday is 497,000 which is above last week’s 487,000 and last year’s 495,000.
January Feeder Cattle traded above the 100 DMA for the first time in a week on Monday reaching the high at 140.625 which is just below resistance at 140.775. It settled at 140.025. The 100 DMA is at 139.38. Trade was lackluster as the market seems reluctant to power past the long-term resistance level. A failure from the 100 DMA has support at 138.95 and if that doesn’t hold, we could see a re-test of support at 136.75. Support then comes in at 135.60. If settlement holds, a test of resistance at 140.775 is likely and a breakout above here could see resistance at 142.40 tested.
The Feeder Cattle Index declined and is at 136.57 as of 12/11/2020.
February Live Cattle consolidated within Friday’s trading range making the high at 113.575 and the low at 112.55. Settlement was at 113.10. The high is below resistance at 113.90 and the low is above support at 112.35. Price is now in the upper end of the consolidation range the February contact has been trading within since it became the lead contract. The range is from 109.00 (low) to the 114.70 (high). A rally above the high could see price test resistance at 114.65. Resistance then comes in at 116.55. A break down from settlement could see support tested at 112.35 and then 110.80. Weakening cutout prices and slowdowns/ shutdowns continue to plague the cattle markets. Vaccinations have begun for the Wuhan virus and this is positive news for the market.
Boxed beef cutouts were lower with choice cutouts down 4.19 to 209.69 and select down 3.41 to 192.30. The choice/ select spread narrowed to 17.39 and the load count was 177.
Monday’s estimated slaughter is 120,000, which is above last week’s 119,000 and even with last year.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading in the 5 Area Feeding region has been at a standstill. Last week in the Southern Plains live purchases traded at 108.00. For the prior week in Nebraska live and dressed purchases traded from 106.00-107.00 and mostly at 168.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 104.00-105.00 and mostly at 168.00.
The USDA is reporting live trades at a standstill for Monday (so far). The weekly range for last week is live trades from 103.00 – 108.00 and dressed 164.00 – 173.00.
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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