Commentary
April Lean Hogs continued its upsurge trading to a new high at 77.60, stopping just shy of resistance at 77.80. It pulled back and settled at 76.95. If Hogs can hold settlement, a re-test of resistance at 77.80 is possible. Resistance then comes in at 79.80 and 80.45. If futures can’t hold settlement, a test of support at 76.175 is possible. Support then comes in at 75.60 and then 74.25. China announced it will sell another 30,000 MT of frozen pork from its state reserves on Jan. 28. This latest sale will push its 2021 sales tally to 110,000 MT amid preparations for its Lunar New Year holiday and spring festival.
The Pork Cutout Index increased and is at 80.31 as of 1/25/2021.
The Lean Hog Index rose and is at 65.88 as of 1/22/2021.
Estimated Slaughter for Tuesday is 455,000 which is below last week’s 498,000 and last year’s 493,000. The estimated weekly total is 941,000 which is above last week’s 925,000 and below last year’s 992,000.
March Feeder Cattle broke down hard as corn futures surged, plunging Feeders to the session low at 141.10. This is just above support at 140.775. It settled nearby at 141.475. A rally from settlement could see resistance tested at 142.40 and then 143.50. Resistance then comes in at 144.25 and then 145.05. A failure from settlement could see price test support at 140.775 and then 138.95.
The Feeder Cattle Index increased and is at 134.96 as of 1/25/2021.
April Live Cattle continued higher, trading to a new high at 123.70 then pulling back to settle at 123.10. If futures can hold settlement, a test of resistance at 124.30 is possible. A failure from settlement could see support tested at 122.825 and then 121.90.
Boxed beef cutouts were higher with choice cutouts up 2.33 to 229.06 and select up 1.12 to 217.33. The choice/ select spread widened to 11.73 and the load count was 131.
Tuesday’s estimated slaughter is 117,000, which is even with last week and below last year’s 118,000. The estimated weekly slaughter (so far) is 232,000, which is above last week’s 229,000 and below last year’s 240,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been at a standstill in the Southern and Northern Plains. In the Western Cornbelt negotiated cash trading has been inactive on light demand. Not enough purchases for a market trend. Last week in the in Texas Panhandle live purchases traded from 110.00-111.00. In Kanas live purchases traded at 110.00. For the prior week in the Northern Plains live purchases traded from 109.00-110.00 and dressed purchases, in Nebraska, traded at 173.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 105.00-110.00 and from 170.00-173.00, respectively.
The USDA is reporting trades for live cattle at 110.00 and nothing for 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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