Walsh Trading Daily Insights
Commentary
December Lean Hogs tumbled down to support at 74.25 making the low just below it at 74.075. The high came in early in the session at 76.30. It settled right at support at 74.25. Cash prices continue to decline which is keeping pressure on futures prices. It seems there is plenty near term supply for packers to buy as producers are willing sellers at lower prices. Cutouts have been in decline and continuing lower. The excitement over the good export sales report has been short lived. If price can hold settlement, Hogs could challenge resistance at 75.60. A failure below settlement could see price test support at 73.325.
The Pork Cutout Index decreased and is at 94.22 as of 11/01/2021.
The Lean Hog Index decreased and is at 79.16 as of 10/29/2021.
Estimated Slaughter for Tuesday is 479,000, which is below last week’s 480,000 and last year’s 491,000. Monday’s slaughter was revised lower to472,000. The estimated slaughter for the week (so far) is 951,000, which is below last week’s 958,0000 and last year’s 983,000.
January Feeder Cattle got up off the canvas and delivered a knockdown blow of its own, bouncing back nicely from Monday’s knockdown punch. It rallied past the Monday high to the session high at 157.15, forming a bullish engulfing candle in the process. The low came in at 152.775 and settlement was near the high at 157.025. The high was just shy of resistance at the 157.30 – 157.92 zone. Price must overcome this area or we could see some consolidation before deciding on a move. A break out above resistance could see price revisit resistance at 160.625. A failure from settlement could see price test support at 156.075 and then 155.275. Support then comes in at 154.25.
The Feeder Cattle Index decreased and is at 156.26 as of 11/01/2021.
December Live Cattle was also able to bounce back after the weakness of the past few days trading higher on the session and nearing resistance at 130.45. It the high just below it at 130.425 and settled at 129.95. Show-lists are once again lighter and expectations are for steady to higher cash prices this week. Packers are now believed to be able to increase slaughter numbers and must in order to get ready for the holiday season orders, in my opinion. They have been more aggressive in their pursuit of cattle and are taking them to the house a lot sooner than they were earlier. In other words, even though they are telling producers they want them for 1 – 14 days or longer, they are taking them within 1 – 3 days. That will get producers current as winter weather is settling in and the prime / choice percentage has started to decline. If price can retake resistance at 130.45, we could see price test the October 27th high at 131.925. A failure from settlement could see price test support at the flattening 50 DMA at 128.475 and then support nearby at 128.10.
Boxed beef cutouts were mixed as choice cutouts dipped 0.20 to 287.38 and select increased 1.74 to 266.13. The choice/ select spread narrowed to 21.25 and the load count was 114.
Tuesday’s estimated slaughter is 122,000, which is even with last week and last year. The estimated total for the week (so far) is 243,000, which is below last week’s 244,000 and above last year’s 242,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been at a standstill in the Southern Plains. In Nebraska negotiated cash trading has been limited on very light demand. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend in these regions. Last week in the Texas Panhandle live purchases traded from 124.00- 126.00. In Kansas live purchases traded at 126.00 for the prior week. For the previous week in Nebraska live and dressed purchases traded at 127.00 and at 200.00, respectively. In the Western Cornbelt last week live and dressed purchases traded from 126.00-127.00 and at 200.00.
The USDA is indicating no cash trades for live cattle and at 200.00 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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