Walsh Trading Daily Insights
Commentary
February Lean Hogs consolidated in the lower end of Friday’s trading range. It opened higher, making the high at 82.025 in the opening 5 minutes of trade then grinding lower the rest of the day to the low at 80.75. It settled near the low at 80.925. February Hogs are trading at a stiff premium to the cash market (Lean Hog Index) and traders tightened that spread as the cash market has continued to weaken. The cash market is expected to firm in my opinion as Hog numbers are down and the USDA is looking for China to increase its pork imports in 2022. Friday’s breakdown took price to the 80.45 support level and the Monday low is just above it. A failure below 80.45 could see price test support at 79.80. Support then comes in at 78.80. If settlement holds price could revisit resistance at 81.70.
The Pork Cutout Index decreased and is at 85.89 as of 11/26/2021.
The Lean Hog Index decreased and is at 71.63 as of 11/24/2021.
Estimated Slaughter for Monday is 483,000, which is above last week’s 475,000 and below last year’s 496,000.
January Feeder Cattle rallied early in the trading session making a new high for the up move at 168.30 then consolidated near the high before breaking down to the session low at 165.175. It settled at 165.725. The low and settlement was below support at 165.775. Once again futures have been trading rich to the cash index and I believe after making the high traders took some of this premium off the table. A failure from settlement could see price test support at 163.50 and then 162.00. If settlement holds, we could re-test resistance at 167.15 and then the Monday high.
The Feeder Cattle Index increased and is at 156.29 as of 11/19/2021.
February Live Cattle also opened higher and traded to its high for the day and a new high for the up move early in the trading session. The high was at 141.85 and it is the highest the lead futures contract has been since March 2016. The Monday high tied the March 2016 high. Selling took over and price broke down the rest of the session to the low at 138.95. Settlement was at 139.30. The low is just above support at 138.60 and this needs to hold in my opinion or we could see futures press lower. Support below here is at 137.875 and then 136.35. If settlement holds, price could revisit resistance at 140.175. Resistance then comes in at 142.25.
Boxed beef cutouts were lower as choice cutouts decreased 2.43 to 277.58 and select decreased 0.26 to 262.02. The choice/ select spread narrowed to 15.56 and the load count was 82.
Monday’s estimated slaughter is 121,000, which is below last week’s 122,000 and above last year’s 118,000.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been mostly inactive on very light demand in Nebraska. Not enough purchases for a market trend. Negotiated cash trading has been at a standstill in all other major feeding regions. Last week in the Southern Plains and Colorado live purchases traded at 140.00. In Nebraska, live and dressed purchases traded from 136.00-140.00 and at 217.00, respectively. In the Western Cornbelt live and dressed purchases traded from 135.00- 140.00 and from 213.00-217.00, respectively.
The USDA is indicating cash trades for live cattle at 137.50 and nothing 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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