Walsh Trading Daily Insights
Commentary
December Lean Hogs closed the downside gap, paused, and then continued lower taking out support at 76.75 and breaking down to the low of the session and a new low for the down move at 75.925. The high of the session came in at 78.275 as buyers came in after the initial low was made just below the gap close (77.20 trade closed the gap) at 77.00. The eagerness to be long didn’t last as the rally stalled and one more test of the gap and then a lower rally led to bears taking charge and pressuring prices lower the rest of the day. Settlement was near the low at 76.025. Cutouts and cash prices have been in decline mode as the lower slaughter numbers on a weekly basis has led to a short-term back up of hogs as weights are increasing, in my opinion. This has enabled packers to get hogs bought on their terms instead of previous weeks where producers were having their way with the price action. The session low stopped just above support at 75.60. Bulls have to hope this holds as a break down below here puts support at 74.25 in play, in my opinion. Support then comes in at 72.80. If settlement holds, we could see a test of resistance at 76.75. Resistance then comes in at 77.80. Export Sales is out before the Thursday open and could key trade for the session.
The Pork Cutout Index decreased and is at 102.56 as of 10/19/2021.
The Lean Hog Index decreased and is at 86.63 as of 10/18/2021.
Estimated Slaughter for Wednesday is 478,000, which is above last week’s 473,000 and below last year’s 493,000. The estimated total for the week is 1,428,000, which is above last week’s 1,427,000 and below last year’s 1,460,000.
January Feeder Cattle held support at the rising 100 DMA (now at 159.175) Wednesday morning as price dipped below it at the open and making the session low at 159.05. Buying came in even with strength in corn and it took price to the session high at 160.625. This is right at resistance and price dipped to settle near the high at 160.475. Resistance is strong here, in my opinion as the declining 50 DMA now at 161.075 is just above the 160.625 resistance level. Price has to overcome this area or we could see a re-test of the 100 DMA on Thursday, in my opinion. Lots of time price bounces between these averages for a few days before breaking out one way or the other. If price takes out the 50 DMA, we could see resistance re-tested at 162.00. Resistance then comes in at 163.50.
The Feeder Cattle Index down ticked and is at 154.03 as of 10/19/2021.
December Live Cattle continues its consolidating in the upper end of its 131.075 – 125.00 trading range. Wednesday’s trading range was 130.60 – 129.725. Settlement was near the high at 130.525. Price is now revolving around the key level at 130.45. Trading above and below it and going nowhere. If price fails to hold settlement, we could see support at 128.10 re-visited. If price can overtake the Tuesday high, a test of resistance at 132.95 is possible. Cash traded from 123.00 to 127.00 on Wednesday, with 127.00 the highest cash has been (mandatory reporting list) since early September. That’s positive for the market.
Boxed beef cutouts were mixed as choice cutouts decreased 0.85 to 280.03 and select increased 1.27 to 262.80. The choice/ select spread narrowed to 17.23 and the load count was 128.
Wednesday’s estimated slaughter is 121,000, which is above last week’s 120,000 and last year’s 119,000. The estimated total for the week is 362,000, which is above last weeks and last year’s 361,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading has been slow with moderate demand in all major feeding regions. In the Southern Plains live purchases traded mostly steady at 124.00, when compared to last week. In Nebraska a few early live and dressed purchases traded from 124.00- 126.50 and at 196.00, respectively. In the Western Corn a few early live and dressed purchases traded from 124.00-125.00 and at 196.00, respectively. However, not enough purchases in these regions for a market trend. Last week in both regions live purchases traded at 124.00 and dressed purchases traded at 196.00.
The USDA is indicating cash trades for live cattle from 123.00 to 127.00 and at 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 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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