Walsh Trading Daily Insights
Commentary
April Lean Hogs opened lower and traded down to the session low at 79.40 and then reversed course trading to the high at 80.85. It settled nearby at 80.375. Hogs tested resistance at 80.45 for the third day in a row, settling below it today. It is starting to consolidate as it is way over the Lean Hog index. The index is grinding higher and futures price is indicating demand is strong enough for the index to continue higher, in my opinion. If the index starts to falter you could see the futures market contract in my opinion. Pork demand has been strong even with impressive slaughter levels. Export sales and domestic demand continue to be strong and so far, worries about China pulling back on imports has been overblown. It has continuously sold pork from its reserves as pork prices remain elevated. The African Swine Fever remains a force to be dealt with. Other serious diseases have been making outbreaks as the Chinese continue to find it difficult to get back to normal. Their production is supposedly near pre ASF levels but pork prices are saying maybe that isn’t so, in my opinion. Other countries continue to experience ASF issues and Vietnam and the Philippines’ are upping their imports of pork because of shortages and high prices caused by the disease. If Hogs can overtake the 80.45 resistance level, a test of resistance at 83.325 is possible. If futures can’t hold settlement, a test of support at 79.80 is possible. Support then comes in at 78.80 and then 77.80.
The Pork Cutout Index increased and is at 83.06 as of 2/08/2021.
The Lean Hog Index jumped and is at 70.40 as of 2/05/2021.
Estimated Slaughter for Tuesday is 494,000 which is above last week’s 489,000 and last year’s 492,000. The weekly total (so far) is 982,000, which is above last week’s 972,000 and last year’s 981,000.
March Feeder Cattle opened at the session low (137.30), rallied to the session high at 140.875 and then pulled back to settle at 138.50. The high is just above resistance at 140.775. Settlement was just under the key level at 138.95. If price can trade above 138.95, we could see resistance re-tested at 140.775. Resistance then comes in at 142.40. A failure from settlement could see price re-test support at the 100 DMA (137.76) and then the rising 200 DMA at 137.69. Support then comes in at 136.75 and then 135.60.
The Feeder Cattle Index increased and is at 135.63 as of 2/09/2021.
April Live Cattle made the low of the day 1t 123.50, then rallied to the session high at 125.675. The high is a new high for the up move and it is just below resistance at 125.80. This proved too be too much and Cattle then collapsed, trading near the session low and it settled near the low at 123.825. The collapse took price below the key level at 124.30 and this should key trade for Wednesday. If futures can overtake this level, a move toward resistance at 125.80 is possible. A failure from settlement could see support tested at 122.825 and then 121.90.
Boxed beef cutouts were mixed as choice cutouts fell 1.91 to 234.29 and select rose 0.12 to 220.73. The choice/ select spread narrowed to 13.56 and the load count was 121.
Tuesday’s estimated slaughter is 115,000, which is below last week’s 118,000 and last year’s 124,000. The total for the week (so far) is 229,000, which is below last week’s 235,000 and last year’s 242,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading in the Southern Plains has been mostly inactive on light demand, not enough purchases for a full market trend. Negotiated cash trading has been at a standstill in all other major feeding regions. Last week in the Southern Plains live purchases traded at 114.00. Last week in Nebraska and the Western Cornbelt live purchases traded from 112.00- 114.00 and dressed purchases traded from 178.00-180.00.
The USDA is reporting trades for live cattle at 114.20 and 178.00 for dressed cattle so far for this 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 Thursday, February 11, 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
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