Walsh Trading Daily Insights
December Lean Hogs gap opened lower and broke down to a new low for the recent down move at 77.60. The breakdown to the new low saw price close more of the gap created from the break out rally from September 27th. The gap high is September 27th low at 79.75 to the September 24th high at 77.20. Buying came in at the low and price sprinted to the session high at 78.525. The rally closed the opening gap and this bit of action was it as the market went into sleepwalk mode and consolidated the rest of the session. It settled at 78.15. Wednesday’s range was essentially between the key levels 78.80 and 77.80 after the opening decline. If settlement holds, we could see a test of resistance at 79.80. Resistance then comes in at 80.45. A failure from settlement could see price close the September 24th to the 27th gap. Support is at 77.80 and then the gap low at 77.20.
The Pork Cutout Index decreased and is at 108.14 as of 10/12/2021.
The Lean Hog Index decreased and is at 90.94 as of 10/11/2021.
Estimated Slaughter for Wednesday is 478,000, which is even with last week and below last year’s 491,000. The estimated total for the week (so far) is 1,432,000, which is above last week’s 1,418,000 and below last year’s 1,458,000.
November Feeder Cattle continued its consolidation between resistance at 162.00 and support at 160.625, making the high just below resistance at 161.85 and the low just above support at 160.75. It settled at 160.975. A rally past resistance at 162.00 could see price test the 163.50 resistance level. If price can’t hold settlement, we could revisit support at 160.625. Support then comes in at the rising 100 DMA now at 158.85.
December Live Cattle is consolidating in the upper end of its 130.60 – 125.00 trading range. Wednesday’s trading range was a tight 129.45 – 128.55. Settlement was at 129.00. With cash expected to trade higher this week, futures tried to anticipate this price action and took price up to the upper end of the trading range. With the failure of cash to actually trade higher so far this week, trader excitement has waned and price is once again moving down towards the 128.10 support level. A failure from settlement could see a pullback to support at 128.10. Support then comes in at 126.625. If price can hold settlement, a retest of resistance at 130.45 is possible. Resistance then comes in at 132.95.
Boxed beef cutouts were lower as choice cutouts decreased 1.05 to 280.02 and select fell 2.65 to 258.70. The choice/ select spread widened to 21.32 and the load count was 171.
Wednesday’s estimated slaughter is 120,000, which is below last weeks and last year’s 121,000. The weekly estimated total (so far) is 361,000, which is below last week’s 363,000 and even with last year.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited on light demand in the Texas Panhandle. In Kansas negotiated cash trading has been slow with moderate demand. Compared to last week live purchases traded steady at 124.00 in both regions. So far for Wednesday in Nebraska and Western Cornbelt negotiated cash trading has been slow on moderate demand. In Nebraska live purchases traded steady to 2.00 higher at 124.00 and dressed purchases traded steady at 196.00, when compared to the prior week. In the Western Cornbelt a few live and dressed purchases traded from 123.00-124.00 and at 196.00, respectively. However, not enough purchases for a full market trend. For previous week in the Western Cornbelt live and dressed purchases traded at 122.00 and from 193.00-196.00, respectively. A light test of purchases was noted in all of these feeding regions.
The USDA is indicating cash trades for live cattle from 122.00 – 125.00 and from 193.00 – 196.00 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, October 14, 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.**
Senior Market Strategist
Walsh Trading, Inc.
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