Walsh Trading Daily Insights
Commentary
April Lean Hogs opened lower, traded to the session high at 86.45 and then declined the remainder of the session, making the low at the end of the day at 84.625. It settled nearby at 84.90. Hogs spent its second session in a row trading within Friday’s trading range. On Friday, it surged to a new high for the up move reaching 87.25 before pulling back. The Friday low is 83.60. Hogs are still trading at a premium to the Lean Hog index. As of Wednesday’s settlement, it is 9.45 over the index. It usually trades around 2 handles over the index. We could see some consolidation in futures as futures are rich compared to the index. If futures can’t hold settlement, a test of the Friday low is possible. There is support near Friday’s low at 83.325. A failure from here could see price approach support at 80.45. If Hogs can hold settlement, a test of resistance at 85.375 is possible. Resistance then comes in at 87.10.
The Pork Cutout Index increased and is at 89.01 as of 2/16/2021.
The Lean Hog Index increased and is at 75.51 as of 2/15/2021.
Estimated Slaughter for Wednesday is 4902,000 which is above last week’s 490,000 and last year’s 491,000. The weekly total (so far) is 1,315,000, which is below last week’s 1,472,000 and last year’s 1,460,000.
March Feeder Cattle opened lower, rallied to the session high at 141.15 and then declined the rest of the day to the session low at 138.15. It settled at 138.425. Settlement is 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 200 DMA (137.93) and then the nearby 100 DMA at 137.70. Support then comes in at 136.75 and then 135.60.
The Feeder Cattle Index ticked higher and is at 135.71 as of 2/16/2021.
April Live Cattle opened lower, traded to the session high at 126.00 and then traded down the rest of the session making the low at 123.70. It settled at 124.15. The break down in cattle took price below the key level at 124.30 and this should key trade for Thursday. 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. Cattle made a new high for the up move on Tuesday. In my opinion a bearish evening star candlestick pattern has formed in the April contract. A break down from support at 122.825 could lead to a pullback in price.
Boxed beef cutouts were higher as choice cutouts rose 2.74 to 237.51 and select rose 3.61 to 225.64. The choice/ select spread narrowed to 11.87 and the load count was 70.
Wednesday’s estimated slaughter is 99,000, which is below last week’s 116,000 and last year’s 122,000. The total for the week (so far) is 345,000, which is below last week’s 354,000 and last year’s 363,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been at a standstill in all major feeding region. In the Texas Panhandle live purchases traded at 114.00 on Tuesday. Last week in Kansas live purchases were at 114.00. For the prior week in Nebraska live and dressed purchases from 113.00- 114.00 and at 180.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases were from 112.00-115.00 and at 180.00, respectively.
The USDA is reporting trades for live cattle at 114.00 and nothing 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 Friday, February 19, 2021 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.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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Fax: 312.256.0109
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