Walsh Trading Daily Insights
Commentary
February Lean Hogs opened lower and broke down to the session low at 82.325, it recovered and traded to the session high at 83.50. It consolidated the rest of the session and settled near the high at 83.275. The high was just above resistance at 83.325. Since taking over as the lead contract, February Hogs have been consolidating around the 83.325 level. A breakout above this level could see price move towards resistance at 85.325. A failure below settlement could see price revisit support and then possibly move towards support at 80.45.
The Pork Cutout Index decreased and is at 87.41 as of 11/22/2021.
The Lean Hog Index decreased and is at 72.88 as of 11/19/2021.
Estimated Slaughter for Tuesday is 480,000, which is below last week’s 484,000 and last year’s 496,000. Monday’s slaughter was revised lower to 475,000. The estimated total for the week (so far) is 955,000, which is below last week’s 964,000 and last year’s 997,000.
January Feeder Cattle opened higher, made the low at 161.85 and surged. It raced past resistance at 162.00 and then 163.50 to the session high at 164.75. It consolidated late and settled near the high at 164.375. This is a break out move and puts resistance at 165.775 in the market’s crosshairs. Traders wanted to see the Feeder Cattle Index move to new highs and it finally broke out of trading range from 156.56 – 152.79. This could lead to more aggressive buying in the futures markets especially if the index breaks 160.00. Cattle feeders are getting aggressive as they feel cash cattle prices will continue to improve going into and through 2022. A failure from settlement could see price test support 163.50 and then 162.00.
The Feeder Cattle Index increased and is at 156.29 as of 11/19/2021.
February Live Cattle continued higher, making another new high for the up move at 139.65. The low for the day was 138.775. It settled near the high at 139.425. Packers have been aggressive this week in buying cattle, getting cattle bought early in the week at higher prices, reaching 137.00 Tuesday on a live basis and 215.00 for dressed cattle. This is emboldening producers and they hope to see prices continue higher into the holiday season and then the new year. Next target for the upside remains resistance at 140.175. A failure from settlement could see price test support at 138.60. Support then comes in at 137.875.
Boxed beef cutouts were lower as choice cutouts decreased 0.61 to 278.64 and select decreased 1.06 to 262.67. The choice/ select spread widened to 15.97 and the load count was 193.
Tuesday’s estimated slaughter is 122,000, which is even with last week and above last year’s 121,000. The estimated total for the week (so far) is 244,000, which is above last week’s 243,000 and last year’s 241,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been slow on light demand in the Southern Plains with a few live purchases at 136.00, however not enough purchases for a market trend. Negotiated cash trading was limited on light demand in all other major feeding regions. Not enough purchases in any region for a market trend. Last week in the Southern Plains live purchases traded at 133.00. In Nebraska last week live and dressed purchases traded from 133.00-134.00 and at 210.00, respectively. Last week in Colorado live purchases traded from 132.00-135.00. In the Western Cornbelt last week live and dressed purchases traded from 132.00-134.00 and at 210.00, respectively.
The USDA is indicating cash trades for live cattle from 134.00 – 137.00 and from 212.00 – 215.00 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, December 2, 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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