Walsh Trading Daily Insights
Commentary
December Lean Hogs broke free from its consolidation chains and rallied to resistance at 77.80, making the high just above it at 77.825. The low was in the first 5 minutes of trade at 75.25. Settlement was at 77.725. December still has hurdles to surpass with resistance holding at 77.80, the declining 50 DMA at 78.125 and the November 4th hill at 78.225. It must also see a reversal in the cash market as cutouts and cash prices have been in decline and futures are now trading above the cash index. A failure from settlement could see price test support at 76.75. A rally past the November 4th high could see price test resistance at 78.80.
The Pork Cutout Index dipped and is at 93.50 as of 11/15/2021.
The Lean Hog Index decreased and is at 76.17 as of 11/12/2021.
Estimated Slaughter for Tuesday is 484,000, which is above last week’s 478,000 and below last year’s 496,000. Monday’s slaughter was revised lower to 480,000. The weekly estimated total (so far) is 964,000, which is above last week’s 945,000 and below last year’s 976,000.
January Feeder Cattle grinded higher all session, making the low in the first 5 minutes of the day at 158.35 and the high at the end of the session at 159.60. It settled at 159.275. It was able to climb the moving average hurdle from the short-term MA’s (8 DMA – 159.05 and 13 DMA – 158.15) to the intermediate term (21 DMA – 158.525 and 50 DMA 158.225) but still needs to breach the long term 100 DMA at 160.05. It must also surpass resistance at 160.625 or we could see another pullback to the moving average support. A failure from settlement could see price test moving average support and then the 157.92 – 157.30 zone. If price can push past 160.625 resistance, a test of resistance at 162.00 is possible.
The Feeder Cattle Index increased and is at 155.43 as of 11/12/2021.
February Live Cattle did very little as traders wait for cash to actively trade. Cash has traded a light amount mostly steady with last week and now that February is the lead contract, traders will want to see cash trade higher, in my opinion. If cash lingers at steady prices, futures could pull back in response. Cash is lower than February and traders will be more conscious of that now that February is the lead. Expectations are for higher cash and with cutouts treading water, February could take a hit as producers hedge and speculators get anxious. Packers will want to protect their record margins and may pull back on bids, in my opinion. February consolidated within the Monday range, forming an inside candlestick making the high at 136.525 and the low at 135.975. It settled at 136.10. Settlement is below resistance at 136.35. If price can over take the Monday high, we could see price move towards resistance at 137.875. A failure from settlement could see price re-visit the Monday low. A breakdown below the Monday low could see price move towards support at 134.55.
Boxed beef cutouts were lower as choice cutouts decreased 1.07 to 282.13 and select decreased 0.69 to 266.59. The choice/ select spread narrowed to 15.54 and the load count was 162.
Tuesday’s estimated slaughter is 122,000, which even with last week and above last year’s 120,000. The estimated total for the week is 243,000, which is even with last week and above last year’s 240,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been mostly inactive on very light demand in the Southern Plains, Nebraska, and Western Cornbelt. Not enough trades in any region for a market trend. Negotiated cash trading has been at a standstill in Colorado. Last week in the Southern Plains, Nebraska and Colorado live purchases traded at 132.00, and dressed purchases, in Nebraska, traded at 207.00. For the prior week in the Western Cornbelt live and dressed purchases traded from 130.00-132.00 and at 207.00, respectively.
The USDA is indicating cash trades for live cattle from 130.00 – 132.50 and from 206.00 – 208.00 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 18, 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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