Walsh Trading Daily Insights
Commentary
February Lean Hogs is now the lead contract as its volume has overtaken the December contract’s volume. It opened lower and made the low during the first 5 minutes of the day at 82.125. It crept higher the rest of the session and made the high at 83.475 at the end of the session, dipping to settle at 83.15. The grind higher took price to resistance at 83.325, and it held with the lower settlement. Thursday brings the Export Sales Report and the market will likely react to the report. A rally past the Wednesday high could see price move towards resistance at 85.325. A failure below settlement could see price revisit the Wednesday low and possibly move towards support at 80.45. Cash and cutout prices continue to weaken near-term, but traders are anticipating this to change going into 2022 as supply is expected to continue to contract and demand to remain strong and with the USDA to allow faster line speeds on a test basis are looking for cash prices to rebound.
The Pork Cutout Index decreased and is at 92.43 as of 11/16/2021.
The Lean Hog Index increased and is at 76.33 as of 11/15/2021.
Estimated Slaughter for Wednesday is 484,000, which is above last week’s 478,000 and below last year’s 493,000. The weekly estimated total (so far) is 1,448,000, which is above last week’s 1,423,000 and below last year’s 1,469,000.
January Feeder Cattle opened higher and broke down to the low of the day at 157.875. It turned and rallied to the session high at 159.50. It pulled back from the high and settled at 158.925. It continues to consolidate within the moving average bundle from the short-term MA’s (8 DMA – 158.95 and 13 DMA – 158.375) to the intermediate term (21 DMA – 158.50 and 50 DMA 158.225) and is still below the long term 100 DMA at 160.075. If price is able to trade past the 100 DMA, it must surpass resistance at 160.625 to lead to a test of resistance at 162.00. A failure from settlement could see price retest moving average support and then the 157.92 – 157.30 zone. The cash market also continues to consolidate as the Feeder Cattle Index hasn’t been able to break away from its trading range from 152.79 – 156.56.
The Feeder Cattle Index ticked lower and is at 155.48 as of 11/16/2021.
February Live Cattle continues to consolidate since taking over as the lead contract (higher volume than December) on Monday. It is still within the Monday range, with the Wednesday high at 136.45 and the low at 135.875. It settled at 136.40. Price is struggling with resistance at 136.35, but was able to settle above it slightly. If price can overtake resistance and then the Monday high (136.675), we could see price move towards resistance at 137.875. A failure from 135.35, could see price re-visit the Monday low (135.50). A breakdown below the Monday low could see price move towards support at 134.55.
Boxed beef cutouts were lower as choice cutouts fell 3.66 to 278.47 and select dropped 2.53 to 264.06. The choice/ select spread narrowed to 14.41 and the load count was 188.
Wednesday’s estimated slaughter is 122,000, which even with last week and above last year’s 117,000. The estimated total for the week is 365,000, which is even with last week and above last year’s 357,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been limited on light demand in all major feeding regions. Not enough trades in any region for a market trend. 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 – 133.50 and from 204.00 – 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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