Walsh Trading Daily Insights
Commentary
April Lean Hogs opened higher and then made a weak attempt to take out the Monday low, matching it at 75.375 and then racing higher the remainder of the session. It made the high at the end of the day at 78.225, breaking resistance at 77.80 and then settling above it at 78.075. The high is a new high for the up move and today’s upward price action was almost a limit up move. So, buyers became aggressive as China continues sell pork from its reserves, committing to selling 30,000 MT of frozen pork from its state reserves on February 4th and another 30,000 MT on February 9th. That would push its total 2021 reserve sales to 170,000 MT. It has increased its auctions ahead of the Lunar New Year holiday that begins next week. If Hogs can hold settlement, a test of resistance at 78.80 is possible. Resistance then comes in at 80.45. If futures can’t hold support at 77.80, a test of support at 76.175 is possible.
The Pork Cutout Index increased and is at 82.47 as of 2/01/2021.
The Lean Hog Index jumped and is at 68.27 as of 1/29/2021.
Estimated Slaughter for Tuesday is 495,000 which is above last week’s 449,000 and last year’s 493,000. The weekly total (so far) is 978,000, which is above last week’s 935,000 and below last year’s 984,000.
March Feeder Cattle opened higher, traded to the session high at 139.30 and then broke down to the low at 138.00 making the low just above the 100 DMA at 137.96. It consolidated the rest of the session and settled at 139.125. The high and settlement is just above resistance at 138.95. Settlement was right at the 50 DMA (139.12). If settlement holds, we could see resistance re-tested at 140.775. Resistance then comes in at 142.40. A failure from 138.95 could see price re-test support at the 100 DMA and then the rising 200 DMA at 137.34. Support then comes in at 136.75 and then 135.60.
The Feeder Cattle Index down-ticked and is at 136.40 as of 2/01/2021.
April Live Cattle opened higher, ticked to the session low at 121.65 and then worked its way higher the remainder making the session high at the end of the day at 122.675. It settled at 122.525. The high and settlement was just below resistance at 122.825, so in my opinion this will guide trade on Wednesday. If futures can overtake this level, a move toward resistance at 124.30 is possible. A failure from settlement could see support tested at 121.90. Once again, the lead contract has stalled into a rectangle consolidation pattern. The high is at 123.90 and the low is at 121.25.
Boxed beef cutouts were mixed as choice cutouts rose 1.08 to 236.76 and select declined 0.55 to 225.04. The choice/ select spread widened to 11.72 and the load count was 93.
Tuesday’s estimated slaughter is 118,000, which is above last week’s 117,000 and below last year’s 121,000. The total for the week (so far) is 235,000, which is above last week’s 232,000 and below last year’s 241,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been at a standstill in the Southern Plains. In Nebraska and the Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough trades for a market trend. Last week in the Southern Plains live purchases traded at 113.00. For the prior week in Nebraska live and dressed trades were from 112.00-113.00 and 178.00, respectively. For the previous week in the Western Cornbelt live purchases traded from 110.00-112.50 and dressed mostly at 178.00.
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, February 4, 2021 at 3:00 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
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