Walsh Trading Daily Insights
Commentary
December Lean Hogs gap opened lower and broke down to the session low at 73.70. The breakdown took out the gains made after making a low on 11/2/2021 at 74.075. After making the low, traders came back in buying mode as price rallied the rest of the session, closing the opening gap and making the session high at 75.875. It took price past resistance at 75.60 and it settled just above resistance at 75.70. Thursday has the Export sales report before the open and this could influence trade for Thursday. Settlement was right at the 21 DMA and must be overcome or we could see a pullback on Thursday. A break out above the 21 DMA could see price revisit resistance at 76.75. A failure from the 75.60 key level could see price revisit support at 74.25. Support then comes in at 73.325.
The Pork Cutout Index decreased and is at 96.28 as of 11/09/2021.
The Lean Hog Index dipped and is at 79.23 as of 11/08/2021.
Estimated Slaughter for Wednesday is 478,000, which is above last week’s 473,000 and last year’s 454,000. The estimated slaughter for the week (so far) is 1,423,000, which is below last week’s 1,424,000 and last year’s 1,436,000.
January Feeder Cattle opened lower, made the session high at 159.375 and broke down the rest of the session to the low at 157.775. With corn racing higher and the cash index decently below the futures price, traders took price down to the 157.92 – 157.30 support zone. The decline stalled and price settled above the zone at 158.05. A failure from settlement could see price push below support at the 157.92 – 157.30 zone and test support at 156.075. If settlement holds, we could see price attempt to climb the moving average hurdle from the short-term MA’s (8 DMA – 158.15 and 13 DMA – 158.25) to the intermediate term (21 DMA – 158.75 and 50 DMA 158.65) to the long term 100 DMA at 160.025. Resistance then comes in at 160.625.
The Feeder Cattle Index increased and is at 154.98 as of 11/09/2021.
December Live Cattle continued to run in place, trading from a high at 132.375 to its low at 131.30 with settlement near the high at 132.00. This keeps price in limbo land as it awaits even higher cash prices from last week’s nice rally. Cash traded as high as 132.00 on Wednesday, according to the mandatory reporting system, with dressed purchases as high as 207.00. This developing trade could lead to a higher average weekly price than last week, but is it enough to drive futures higher…. If price can over take the Monday high, we could see price test the August 24th high at 132.85 when the October contract was the lead contract, resistance is next door at 132.95. A failure from settlement could see price move towards support at 130.45.
Boxed beef cutouts were lower as choice cutouts decreased 2.28 to 285.52 and select fell 4.00 to 266.62. The choice/ select spread widened to 18.90 and the load count was 195.
Wednesday’s estimated slaughter is 122,000, which even with last week and above last year’s 114,000. The estimated total for the week (so far) is 365,000, which is even with last week and above last year’s 353,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading was slow with light to moderate demand in all major feeding regions. In the Southern Plains live purchases traded 2.00-3.00 higher from 131.00-132.00, when compared to last week. In Nebraska, compared to last week, live purchases traded 2.00 higher at 132.00 and dressed purchases traded 3.00-5.00 higher at 207.00. In the Western Cornbelt live purchases traded 1.00-2.00 higher from 131.00-132.00, when compared to the last reported market on Tuesday. Not enough dressed purchases for a market trend. Last week dressed purchases traded from 202.00-204.00.
The USDA is indicating cash trades for live cattle from 130.00 – 132.00 and from 204.00 – 207.00 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 11, 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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