Walsh Trading Daily Insights
Commentary
December Lean Hogs opened lower and traded to the session low at 77.40. This above the low established last Thursday at 77.25 as buying came in again leaving the tiny gap in place from 77.25 to 77.20. This rally took price to the session high at 79.475. This is just below resistance at 79.80 and price stagnated and consolidated the rest of the session and settled at 78.75. Price is now in consolidation mode near the low of the down move from the Monday high to the Thursday low. If the low falls and the gap is closed, we could see price test support at 76.75. Support then comes in at 75.60. If settlement holds, we could see a re-test of resistance at 79.80. Resistance then comes in at 80.45.
The Pork Cutout Index decreased and is at 104.47 as of 10/15/2021.
The Lean Hog Index decreased and is at 87.59 as of 10/14/2021.
Estimated Slaughter for Monday is 478,000, which is above last weeks and last year’s 477,000. The Friday and Saturday slaughter numbers were revised lower to 470,000 and 251,000 respectively, which lowers the estimated total for the week to 2,625,000, which is above last week’s 2,597,000 and below last year’s 2,685,000.
November Feeder Cattle broke down below the 160.625 support level to the session low at 159.225. The break down stalled just above support at the rising 100 DMA at 159.00. Settlement was near the low at 159.35. The high was at 161.75. Corn prices have been firming and cattle buyers are pulling back on what they are willing to pay for feeder cattle as trucking is expensive and difficult to come by in some areas. If price can’t hold settlement, we could test support at the 100 DMA and then the rising 21 DMA at 158.20. Support then comes in at the 157.30 – 157.92 area. If settlement holds, we could see resistance tested at 160.626 and then the 50 DMA at 161.20.
The Feeder Cattle Index increased and is at 153.90 as of 10/15/2021.
December Live Cattle is consolidating in the upper end of its 131.075 – 125.00 trading range. Monday’s trading range was a tight 130.975 – 130.050. Settlement was at 130.425. The range was inside Friday’s trading range forming an inside candlestick. Last week’s slaughter was disappointing at 646,000 and as packers did some cooler cleaning. Wonder what excuse they will give this week…. Cash was at a standstill on Monday as packers and producers plan for battle…. Is the key level at 130.45 the new 128.10 key level…? Will price revolve around this level as producers and packers try to strike a deal… If price fails to hold settlement, we could see support at 128.10 re-visited. If price can overtake the Monday high, a test of resistance at 132.95 is possible.
Boxed beef cutouts were lower as choice cutouts decreased 0.15 to 280.09 and select declined 0.81 to 259.81. The choice/ select spread widened to 20.28 and the load count was 115.
Monday’s estimated slaughter is 120,000, which is below last week’s 121,000 and above last year’s 119,000.
The USDA report LM_Ct131 states: Thus far for Monday in the Western Cornbelt negotiated cash trading was mostly inactive with very light demand. Not enough purchases for a market trend. In the Southern Plains and Nebraska negotiated cash trading was at a standstill. Last week in the 5 Area feeding regions live purchases traded at 124.00. For the prior week in Nebraska and Western Cornbelt dressed purchases traded at 196.00.
The USDA is indicating no cash trades for live cattle and 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 21, 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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