Walsh Trading Daily Insights
Commentary
December Lean Hogs spent most of its trading session consolidating between resistance at 75.60 and support at 74.25. It made the session low early in the day at 73.80 and the early high at 75.30. A sudden surge in the last 20 minutes of the day saw the December Hogs race to the session high at 77.25 before pulling back to settle at 76.075. The rally took price past resistance at 76.75 but it couldn’t stay up there and settled below it. In my opinion, the rally was a short-covering rally at month end pushing prices higher as traders waiting for the end of the session to liquidate all got out at once and when it was done price came down to earth. The good thing was the breakdown at the end didn’t put price back in the early trading range. If price can hold settlement, Hogs could challenge the Friday high. There is strong resistance up above at 77.80 and the declining 21 DMA now at 77.925. A failure below settlement could see price test support at 75.60. Support then comes in at 74.25.
The Pork Cutout Index decreased and is at 94.99 as of 10/28/2021.
The Lean Hog Index decreased and is at 80.70 as of 10/27/2021.
Estimated Slaughter for Friday is 474,000, which is above last week’s 468,000 and below last year’s 487,000. Saturday Slaughter is anticipated to be 156,000, which is below last week’s 229,000 and last year’s 249,000. The estimated slaughter for the week (so far) is 2,551,000, which is below last week’s 2,598,0000 and last year’s 2,694,000.
January Feeder Cattle took one to the chin and was knocked down to the canvas. It took out support at the 157.92 – 157.30 zone and traded down to new news for the recent down move. The low came in at 155.40 which is just above support at 155.275. It bounced and settled at 156.075. Settlement was right at the key level at 156.075. If price can hold settlement, we could see a re-test of resistance at the 157.30 – 157.92 resistance zone. A failure from settlement could see price test support at 155.275. Support then comes in at 154.25.
The Feeder Cattle Index increased and is at 155.88 as of 10/25/2021.
December Live Cattle opened lower, made the session high at 130.60 then broke down to the session low at 128.825. It consolidated the rest of the day and settled at 129.275. Friday was the October contract’s last day of trading and it settled strong at 127.375. With the expiring of the October contract, traders took a look at the relationship of the December futures and cash prices and determined even with the strength in the cash market this week, futures are overpriced, in my opinion. December is now the deliverable and traders brought it closer to the cash price. Slaughter was exceptional this week and if this keeps up, packers may have to keep bidding cash prices higher, in my opinion. This could ignite futures once again and get prices to the next level. We’ll see… Futures settled below the rising 21 DMA (129.575) and must reclaim this level and hold it on Monday morning or we could see further deterioration in price. If price can retake the 21 DMA, we could test resistance at 130.45. A failure from settlement could see price test support at the rising 50 DMA at 128.10 and then support nearby at 128.10.
Boxed beef cutouts were higher as choice cutouts increased 0.83 to 285.72 and select increased 0.73 to 263.37. The choice/ select spread widened to 22.35 and the load count was 113.
Friday’s estimated slaughter is 120,000, which is above last week’s 112,000 and last year’s 115,000. Slaughter for Saturday is expected to be 60,000, which is below last week’s 67,000 and last year’s 61,000. The estimated total for the week (so far) is 668,000, which is above last weeks 661,000 and last year’s 640,000.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading has been at a standstill in the Texas Panhandle. In Kansas, Nebraska and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases for a market trend. Wednesday was the last fully reported market in all regions. In the Southern Plains live purchases traded at 126.00. In Nebraska live and dressed purchases traded at 127.00 and 200.00, respectively. In the Western Cornbelt live and dressed purchases traded from 126.00-127.00 and at 200.00, respectively.
The USDA is indicating cash trades for live cattle from 124.00 – 128.00 and 196.00 – 201.00 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, November 4, 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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