Walsh Trading Daily Insights
Commentary
February Lean Hogs opened higher, made the session low at 66.15 and then rallied the remainder of the session, making the high at the end of the day at 68.50. It settled nearby at 68.425. Wednesday’s trade reversed Tuesday’s loss and it also took out the Friday high, keeping the Lean Hog Index at a discount to the futures price. An open that takes futures past resistance at 68.75 could see price test resistance at 69.90. Resistance then comes in at 71.325. If futures can’t hold support at 67.80, a retest od support at 66.55 is possible. Support then comes in at 64.80.
The Pork Cutout Index declined and is at 78.83 as of 1/19/2021.
The Lean Hog Index rose and is at 65.92 as of 1/18/2021.
Estimated Slaughter for Wednesday is 498,000 which is even with last week and above last year’s 493,000. The estimated weekly total is 1,423,000 which is below last week’s 1,494,000 and above last year’s 1,398,000.
March Feeder Cattle once again tested resistance AT 138.95, falling short with the high at 138.475. It fell back and made the low at 136.825, just above the 136.75 support level. It settled in the middle of the range at 137.525. A failure from here could see price revisit support at 136.75, 135.60 and then 134.25. If settlement holds a re-test of resistance at 138.95 is possible. Resistance then comes in at 140.775.
The Feeder Cattle Index ticked lower and is at 132.81 as of 1/19/2021.
April Live Cattle opened lower, rallied to the session high at 120.00 and then failed, falling to the low at 118.55 and then it consolidated the remainder of the session near the low and settled nearby at 118.875. Settlement is just below resistance at 119.375. If futures can hold settlement, a test of resistance at 120.80 is possible. A failure from settlement could see support tested at 117.80.
Boxed beef cutouts were higher with choice cutouts up 1.42 to 218.91 and select up 0.84 to 207.28. The choice/ select spread widened to 11.63 and the load count was 136.
Wednesday’s estimated slaughter is 120,000, which is above last week’s 118,000 and below last year’s 122,000. The estimated weekly slaughter (so far) is 349,000, which is even with last week and below last year’s 367,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in Kansas negotiated cash trading has been slow on light to moderate demand. Compared to last week live purchases traded unevenly steady at 110.00. In the Texas Panhandle negotiated cash trading was limited on light demand. A few live purchases traded at 110.00. In the Northern Plains negotiated cash trading was mostly inactive with very light demand. In the Western Cornbelt negotiated cash trading was at a standstill. Not enough purchases in any of these regions for a market trend. Last week in the Texas Panhandle live purchases traded from 110.00-111.00. For previous week in Nebraska live and dressed purchases traded from 109.-110.00 and 172.00-174.00, respectively. Last week in Colorado live purchases traded at 109.00. For prior week in the Western Cornbelt live and dressed purchases traded from 108.00-109.00 and at 173.00, respectively.
The USDA is reporting trades for live cattle from 108.00 – 111.00 and no dressed cattle so far for the week.
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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