Walsh Trading Daily Insights
April Lean Hogs is now the lead contract as its volume has surpassed the February volume. On its first day as the lead contract, April Hogs opened lower and barreled its way past resistance on the continuous chart at 74.25 to the session high at 74.975. Resistance proved to be too much for Hogs to overcome as it pulled back below it and consolidated under it and settled at 73.90. Reports of a new uprising of ASF in China sparked the rally, in my opinion as it is the first news of a new occurrence of the lingering disease (in a while) in China. The disease was found on a farm in Pingyuan county with 1,015 pigs, killing 214 of them, the Ministry of Agriculture and Rural Affairs said in a statement, adding that illegal transportation was the suspected cause. That’s always seems to be the kicker… illegal transport of pigs. I guess trucks are the infecting agent in China. In my opinion, until they get a working vaccine in China this disease will stay hidden in trucks and since pirating seems to occur frequently in China, outbreaks will likely continue and could become more widespread. Germany also reported 30 new cases of ASF in wild boars in Eastern Germany. The number of cases now stands at 544 in the country. So far, the disease has stayed away from farm pigs. Asia continues to ban pork imports from that country even as Germany pleads its case to relax the ban on its pork. China also sold another 30,000 tons of pork from its central reserves in an attempt to ensure supply for its New Year and spring holidays. Since December 17th, it has sold around 150,000 tons of pork from its reserves. If Hogs can push past the 74.25 resistance level, a test of resistance at 75.60 is possible. Resistance then comes in at 76.175. If futures can’t hold settlement, a test of support at 72.80 is possible. Support then comes in at 71.85 – 71.325.
The Pork Cutout Index increased and is at 79.03 as of 1/20/2021.
The Lean Hog Index dipped lower and is at 65.67 as of 1/19/2021.
Estimated Slaughter for Thursday is 498,000 which is above last week’s 484,000 and last year’s 491,000. The estimated weekly total is 1,921,000 which is below last week’s 1,978,000 and above last year’s 1,889,000.
March Feeder Cattle opened at the low of the session at 136.575, which is just below support at 136.75. It surged from here, trading past resistance at 138.95 to the session high at 139.45. It settled above resistance at 139.15. A strong open puts resistance at 140.775 in traders’ sights. A failure from settlement could see price revisit support at 136.75, 135.60 and then 134.25.
The Feeder Cattle Index increased and is at 133.19 as of 1/20/2021.
April Live Cattle opened lower, made the low at 118.55 and then rallied to the session high at 120.20 which is a new high and a level we haven’t seen in the lead contract since February 20, 2020. It settled nearby at 119.95. Settlement is above 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 2.29 to 221.20 and select up 3.00 to 210.28. The choice/ select spread narrowed to 10.92 and the load count was 127.
Thursday’s estimated slaughter is 120,000, which is even with last week and below last year’s 122,000. The estimated weekly slaughter (so far) is 469,000, which is even with last week and below last year’s 489,000.
The USDA report LM_Ct131 states: So far for Thursday in Nebraska negotiated cash trading has been slow to moderate with light demand. Compared to last week dressed purchases traded unevenly steady at 173.00. A few live purchases traded at 109.00. However, not enough live purchases for a full market trend. Wednesday was the last fully reported live market from 109.00-110.00. In Kansas negotiated cash trading was limited on light demand. A few live purchases traded steady with Wednesday’s last reported market at 110.00. Thus far for Thursday in the Texas Panhandle, Colorado and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in these regions for a market trend. Wednesday was the last reported market in the Texas Panhandle and Colorado with live purchases at 110.00 and from 109.00-110.00, respectively. 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 105.00 – 111.00 and 169.00 – 173.00 for dressed cattle so far for the week.
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 Friday, January 22, 2020 at 2:00 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.
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.