Quarterly Hogs and Pigs 09/24/2021
Walsh Trading Daily Insights
Commentary
December Lean Hogs grinded higher in front of the Quarterly Hogs and Pigs Report, with the largest move up at the end of the session. The jump in in price at the end of the day was led by the October contract which surged in the last 15 minutes just about 2 handles. The December high came in at 77.20 and the low was at 75.65 with settlement at 76.80. This is a new high for December since taking over as the lead contract, with the range between support at 75.60 and resistance at 77.80. The Quarterly Hogs and Pigs report is out and it looks like it will be perceived as to the market, in my opinion. Look below for some numbers…. If price can overtake resistance at 77.80, a test of resistance at 78.80 is possible. Resistance then comes in at 79.80 and then 80.45. A failure from settlement could see support revisited. Support then comes in at 74.25.
The Pork Cutout Index decreased and is at 104.37 as of 9/23/2021.
The Lean Hog Index decreased and is at 91.89 as of 9/22/2021.
Estimated Slaughter for Friday is 472,000, which is above last week’s 470,000 and last year’s 462,000. Saturday slaughter is expected to be 237,000, which is higher than last week’s 185,000 and last year’s 224,000. The estimated total for the week (so far) is 2,578,000, which is above last week’s 2,537,000 and below last year’s 2,606,000.
United States Hog Inventory Down 4 Percent
United States inventory of all hogs and pigs on September 1, 2021 was 75.4 million head. This was down 4 percent from September 1, 2020, but up 1 percent from June 1, 2021.
Breeding inventory, at 6.19 million head, was down 2 percent from last year, and down slightly from the previous quarter.
Market hog inventory, at 69.2 million head, was down 4 percent from last year, but up 1 percent from last quarter.
The June-August 2021 pig crop, at 33.9 million head, was down 6 percent from 2020. Sows farrowing during this period totaled 3.05 million head, down 7 percent from 2020. The sows farrowed during this quarter represented 49 percent of the breeding herd. The average pigs saved per litter was 11.13 for the June-August period, compared to 11.06 last year.
November Feeder Cattle drifted with the high at 158.85 and the low at 157.50. It formed an inside candlestick as the range was within the Thursday range. It settled near the high at 158.575. 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 154.04 as of 9/23/2021.
December Live Cattle open at the session high at 128.60 and grinded lower to the session low at 127.725. It settled at 128.15. It is still trading around the key level at 128.10 as cash prices are stagnant. Slaughter numbers continue to be sluggish as packers are having are hard time getting employees to come to work. The Tyson vaccine mandate is also creating problems, in my opinion. Slaughter numbers are inconsistent, unable to stay in the much needed 660,000 range, in my opinion. This, plus formula and cattle bought with time keeps the packer in total control of what he pays the producer, in my opinion. He is not interested in paying up for cattle. I think the packer looks at the prices paid as a gift… After all prices were a lot lower last year. So be happy what you are getting, after all it is a gift. The Cattle on Feed report is out and the numbers are below. A breakdown below the low 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 decreased 2.28 to 303.32 and select declined 0.46 to 274.53. The choice/ select spread narrowed to 28.79 and the load count was 104.
Friday’s estimated slaughter is 110,000, which is below last week’s 118,000 and last year’s 113,000. Saturday slaughter is expected to be 54,000, which is below last week’s 64,000 and last year’s 59,000. The estimated total for the week (so far) is 641,000, which is below last week’s 657,000 and last year’s 655,000.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading has been mostly inactive on light demand in Kansas, Nebraska and Western Cornbelt. Not enough purchases for a market trend in these regions. In the Texas Panhandle negotiated cash trading has been at a standstill. Wednesday was the last fully report market in all regions. In the Texas Panhandle live purchases traded at 124.00. In Kansas live purchases traded from 123.00-124.00. In Nebraska live and dressed purchases traded at 124.00 and 198.00, respectively. In the Western Cornbelt live and dressed purchases traded from 123.00- 124.00 and from 194.00-198.00, 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).
United States Cattle on Feed Down 1 Percent
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.2 million head on September 1, 2021. The inventory was 1 percent below September 1, 2020. This is the second highest September 1 inventory since the series began in 1996.
Placements in feedlots during August totaled 2.10 million head, 2 percent above 2020. Net placements were 2.05 million head. During August, placements of cattle and calves weighing less than 600 pounds were 405,000 head, 600-699 pounds were 310,000 head, 700-799 pounds were 480,000 head, 800-899 pounds were 534,000 head, 900-999 pounds were 275,000 head, and 1,000 pounds and greater were 100,000 head.
Marketings of fed cattle during August totaled 1.89 million head, slightly below 2020.
Other disappearance totaled 59,000 head during August, 7 percent above 2020.
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 30, 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
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