Walsh Trading Daily Insights
Commentary
December Lean Hogs continued its climb higher, trading past resistance at 83.325 to the session high at 83.975. The low was at 81.075 and settlement was above resistance at 83.575. The euphoria over the bullish Hogs and Pigs report has lasted for 2 sessions. Hogs now need to see cash prices and cutouts firm up going forward in my opinion. Traders remain worried about lack of China participation in export markets. I am not one of them. They are not historical purchasers of pork from the US. They were in the market out of need. We need to keep marketing our pork to any and all potential customers and our industry will survive as they have in the past without China. Our exports remain strong away from China and they will be back when necessary. They could also be biting themselves in the foot by staying out of the market as our producers are Aware of their absence and have stepped back from higher production levels in my opinion. Once China’s liquidation woes are finished and they are short hogs…. Stay tuned…. If price can continue its follow through higher, a test of resistance at 85.325 is possible. Resistance then comes in at 87.10. A failure from settlement could see a pullback in price. Support is at the declining 21 DMA at 82.15 and then 80.45.
The Pork Cutout Index increased and is at 107.05 as of 9/27/2021.
The Lean Hog Index ticked higher and is at 91.51 as of 9/24/2021.
Estimated Slaughter for Tuesday is 476,000, which is above last week’s 460,000 and below last year’s 490,000. The estimated total for the week (so far) is 954,000, which is above last week’s 923,000 and below last year’s 980,000.
November Feeder Cattle traded below support at 155.275 early in the session to the session low at 155.00 and found its footing grinding higher the rest of the session. It made the high at the end of the day at 157.15 and settled nearby at 157.05. Corn weakened and Feeders rallied in response, in my opinion. The high and settlement are still below the 157.30 – 157.92 resistance area. If price can take out the resistance area, a test of resistance at 160.625 is possible. A failure from settlement could see price test support at 156.075 and then 155.275.
The Feeder Cattle Index Down ticked and is at 154.81 as of 9/27/2021.
December Live Cattle was in limbo, unable to penetrate resistance at 128.10 and unable to breakdown to lower support levels. The range was narrow from 127.90 to 127.125. Settlement was at 127.50. A breakdown below the low could see the 126.625 support level tested. Support then comes in at 125.80. If price can rally past 128.10, a move toward resistance at 130.45 is possible. Futures need to see some positive price action in the cash market to get traders excited and get price out of its doldrums, in my opinion.
Boxed beef cutouts were lower as choice cutouts decreased 1.14 to 301.56 and select down ticked 0.03 to 274.35. The choice/ select spread narrowed to 27.21 and the load count was 155.
Tuesday’s estimated slaughter is 121,000, which is below last week’s 122,000 and above last year’s 118,000. The estimated total for the week (so far) is 240,000, which is below last week’s 241,000 and above last year’s 234,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been mostly inactive on very light demand in all major feeding regions. Not enough purchases in any region for a full market trend. Last week in the Texas Panhandle live purchases traded at 124.00. In Kansas last week 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 122.00-124.00 and from 193.00- 198.00, respectively.
The USDA is indicating cash trades for live cattle from 122.00 – 124.00 and from 193.00 – 198.00 on a dressed basis (so far).
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
888.391.7894
Fax: 312.256.0109
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