Walsh Trading Daily Insights
Commentary
December Lean Hogs eked out a new high for the rally reaching 84.00 and making the low at 82.70, essentially consolidating in front of the export sales report which comes out Thursday morning. Settlement was at 83.60, keeping price above the key level at 83.325. 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 now at 81.85 and then 80.45. Thursday’s price action could be influenced by the release of the export sales report.
The Pork Cutout Index increased and is at 108.49 as of 9/28/2021.
The Lean Hog Index increased and is at 92.15 as of 9/27/2021.
Estimated Slaughter for Wednesday is 475,000, which is above last week’s 471,000 and last year’s 467,000. Tuesday’s slaughter was revised lower to 471,000. The estimated total for the week (so far) is 1,424,000, which is above last week’s 1,394,000 and below last year’s 1,447,000.
November Feeder Cattle reversed yesterday’s price action as corn rebounded from Tuesday’s decline. It opened on weakness and rallied to the high of the day but the high was below the 157.30 – 157.92 resistance area at 157.275. The failure to take out resistance saw price take out Tuesday’s low, making the session low at the end of the day at 154.90. It settled at 155.275. Settlement was right at the key level at 155.275 and should key trade for Thursday. If price can hold settlement, a re-test of resistance at 157.30 – 157.92 is possible. A failure from settlement could see price test support at 154.25 and then 153.50.
The Feeder Cattle Index dipped and is at 154.66 as of 9/28/2021.
December Live Cattle is starting to weaken as once again the price action failed to rise above resistance at 128.10, making the high at 127.875 and dipping below support at 126.625 to the session low at 126.425. It bounced and settled above support at 127.05. The cash market is starting to weaken as packers are idling plants for cleaning and are still having difficulties in getting employees to work. This keeps slaughter levels at the low end of expectations, extending cattle supplies down the road and there isn’t any need for them to be aggressive in buying cattle as there are more cattle out there for them to buy than they need at this moment, in my opinion. A breakdown below the low could see the 125.80 support level tested. Support then comes in at 124.30. If price can rally past 128.10, a move toward resistance at 130.45 is possible.
Boxed beef cutouts were lower as choice cutouts collapsed 4.23 to 297.33 and select dropped 2.57 to 271.78. The choice/ select spread narrowed to 25.55 and the load count was 158.
Wednesday’s estimated slaughter is 116,000, which is below last week’s and last year’s 122,000. Tuesday’s slaughter was revised lower to 117,000. The estimated total for the week (so far) is 352,000, which is below last week’s 363,000 and last year’s 356,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been light on light to moderate demand in all major feeding regions. In the Texas Panhandle, compared to last week, live purchases have traded steady at 124.00. In Kansas a few live purchases have traded from 121.00-124.00, however not enough for a full market trend. Last week in Kansas live purchases traded from 123.00-124.00. In Nebraska, compared to last week, live purchases have traded steady to 2.00 lower from 122.00- 124.00, and dressed purchases have traded 2.00 lower at 196.00. In the Western Cornbelt, a few live and dressed purchases have traded from 121.00-123.50 and at 196.00, respectively, however not enough for a full market trend. In the Western Cornbelt last week 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 121.00 – 124.00 and from 188.00 – 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
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