Walsh Trading Daily Insights
Commentary
February Lean Hogs opened lower and surged to the session high. It was unable to take out the December 1st high at 69.60 making the high at 69.15 and then collapsing, trading to just above the low made at the open at 67.075. It settled nearby at 67.60. Settlement was just below the key level at 67.80 and should key trade for Thursday. Trading above 67.80 could see price re-test resistance at 68.75 and then the Wednesday high. A failure from settlement sets a potential lower high and a pullback to support at 66.55 and then 64.80. Thursday could be interesting as traders will be looking at the Export Sales report to gauge China’s 2021 purchases and what it could imply going forward. It is month end quarter end and year end. Do we go out with a bang or a bust? Stay tuned. HAPPY New Year!
The Pork Cutout Index is at 71.01 as of 12/29/2020.
The Lean Hog Index is at 59.93 as of 12/28/2020.
Estimated Slaughter for Wednesday is 472,000 which is above last week’s 431,000. Last year was a holiday.
March Feeder Cattle opened lower and kept on going lower as corn strength rattled traders. It traded past support at 140.775 to session low at 139.225. This is just above the 100 DMA on the continuous chart at 139.075 and the key support level at 138.95. It settled at 139.75. A failure below support could see price test support at 136.75 and then 135.60. If settlement holds resistance could be tested at 140.775 and then 142.40. Continued strength in corn could be problematic for the Feeder Cattle market.
The Feeder Cattle Index increased and is at 138.71as of 12/29/2020.
February Live Cattle traded lower in a quiet session, testing support at 113.90 as it made the low just above it at 113.95. It bounced and settled at 114.45. Resistance is at 114.65, 116.55 and then 117.80. If settlement fails a test of support at 113.90 and then 112.35 is possible.
Boxed beef cutouts were higher with choice cutouts up 0.23 to 210.53 and select up 4.38 to 199.86. The choice/ select spread narrowed to 10.67 and the load count was 141.
Wednesday’s estimated slaughter is 117,000, which is above last week’s 113,000. Last year was a holiday.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading in the Southern Plains has been limited on light demand with a few early live purchases at 111.00. In Nebraska, negotiated cash trading has been slow on light demand with a few early live and dressed purchases at 110.00 and 176.00 respectively. In Colorado negotiated cash trading has been mostly inactive on very light demand. In the Western Cornbelt negotiated cash trading has been slow on light demand with a few live purchases at 112.00. Not enough purchases in any region for a full market trend. Last week in the Southern Plains live purchases traded at 110.00. In Nebraska last week live purchases traded at 110.00 and dressed purchases traded at 172.00. Last week in the Western Cornbelt live purchases traded from 106.00- 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, December 31, 2020 at 1:00 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.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
www.walshtrading.com
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (WTI) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.