Walsh Trading Daily Insights
Commentary
December Lean Hogs continues to trade in a trading range since taking over as the lead contract (based on volume). The range is from 75.375 high to 71.275 low. The range is below resistance at 75.60 and the low is just below support at 71.325. The Wednesday range is 74.925 to 72.50. The Quarterly Hogs and Pigs report is on Friday and it looks like traders are taking a wait and see approach to the market. The report is expected to show all hogs and pigs down 1.7% from last year and breeding inventory to be lower by 1.1%. Exports are out before the open on Thursday and could affect trader sentiment for the session. Cutouts and the Lean Hog Index continues to trend lower, limiting rallies even though futures are cheap to cash, in my opinion.
The Pork Cutout Index decreased and is at 104.43 as of 9/21/2021.
The Lean Hog Index decreased and is at 93.56 as of 9/20/2021.
Estimated Slaughter for Wednesday is 471,000, which is above last week’s 467,000 and below last year’s 486,000. The estimated total for the week (so far) is 1,394,000, which is below last week’s 1,419,000 and last year’s 1,451,000.
November Feeder Cattle rallied past resistance at 157.92 to the session high at 158.375. The rally came after traders shook off early weakness with Feeders making the session low at 156.625. It settled near the high at 158.225. If price can hold settlement, a test of resistance at 160.625 is possible. If settlement fails, a re-test of support at 157.92 – 157.30 is likely. Support the comes in at 156.075.
The Feeder Cattle Index decreased and is at 153.57 as of 9/21/2021.
December Live Cattle opened higher above the key level at 128.10 and down-ticked to the low at 127.95. It grudgingly made its way higher and made the session high at the end of the day at 128.70, settling at 128.55. With futures above cash and cash going nowhere fast, futures are fairly stagnant. The Cattle on Feed report is on Friday and producers are hopeful this will lead to positive price action going forward. Placements are expected to be down .9%, On Feed down 1.8% and Marketings unchanged. Markets should continue to linger in front of the report, in my opinion. A breakdown below 128.10 could see the 126.625 support level tested. If price can hold settlement a move toward resistance at 130.45 is possible.
Boxed beef cutouts were lower as choice cutouts fell 3.54 to 307.83 and select dropped 2.51 to 275.50. The choice/ select spread narrowed to 32.33 and the load count was 186.
Wednesday’s estimated slaughter is 122,000, which is above last week’s and last year’s 121,000. The estimated total for the week (so far) is 363,000, which is above last week’s 355,000 and last year’s 361,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in Kansas and Nebraska negotiated cash trading has been slow with moderate demand. In Kansas live purchases traded steady from 123.00-124.00 when compared to last week. In Nebraska live purchases traded 1.00 lower at 124.00 and dressed purchases traded 2.00 lower at 198.00 when compared to the prior week. So far for Wednesday in the Texas Panhandle and Western Cornbelt negotiated cash trading has been limited on light demand. In the Texas Panhandle a light test of live purchases traded steady at 124.00. In the Western Cornbelt not enough purchases in any price range for a full market trend. Last week in the Western Cornbelt live and dressed purchases traded from 123.00-124.00 and from 196.00-200.00, respectively.
The USDA is indicating cash trades for live cattle from 120.00 to 125.00 and from 193.00 to 198.00 on a dressed basis (so far).
Cold Storage: Total red meat supplies in freezers were up 4 percent from the previous month but down 6 percent from last year. Total pounds of beef in freezers were up 4 percent from the previous month but down 8 percent from last year. Frozen pork supplies were up 4 percent from the previous month but down 1 percent from last year. Stocks of pork bellies were down 37 percent from last month and down 44 percent from last year.
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, September 23, 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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