Walsh Trading Daily Insights
Commentary
February Lean Hogs consolidated within Tuesday’s trading range. It opened higher, making the high at 80.65 in the opening 5 minutes of trade then traded to the low at 79.25. It consolidated the rest of the session and settled at 80.125. February Hogs are still trading at a stiff premium to the cash market (Lean Hog Index) and cash continues to trade downward. The Lean Hog Index is at its lowest level since early in February 2021. Tuesday’s breakdown took price just below the 78.80 support level and the Wednesday low is just above it. A failure below 78.80 could see price test support at 77.80. Support then comes in at 76.75. Settlement was just below resistance at 80.45. If price could overtake 80.45, we revisit resistance at 81.70. Export Sales are out before the Thursday open and could have an effect on the price action for the day.
The Pork Cutout Index increased and is at 85.83 as of 11/30/2021.
The Lean Hog Index decreased and is at 70.04 as of 11/29/2021.
Estimated Slaughter for Wednesday is 480,000, which is above last week’s 471,000 and below last year’s 490,000. The weekly estimated total (so far) is 1,443,000, which is above last week’s 1,426,000 and below last year’s 1,474,000.
January Feeder Cattle also consolidated within its Tuesday range. It made the high at 166.50 and the low at 164.925. It settled at 165.825. Settlement was above the key level at 165.775. Fundamentals seem to be moving in favor of rising prices with the cash market strong as cattle buyers have been aggressive and the Feeder Cattle Index has surged and is now above 160.00. If settlement holds, we could re-test resistance at 167.15 and then the Monday high at 168.30. A failure from settlement could see price test support at 163.50. Support then comes in at 162.00.
The Feeder Cattle Index decreased and is at 161.60 as of 11/30/2021.
February Live Cattle opened higher and traded to its high for the day at 139.75. It couldn’t sustain the strength and broke down the rest of the session making the low at 138.15. Settlement was at 138.60. Settlement was at the key level 138.60 and this needs to hold in my opinion or we could see futures re-test the Tuesday low at 137.35. Support then comes in at 136.35. If settlement holds, price could revisit the Wednesday high. Resistance then comes in at 140.175.
Boxed beef cutouts were lower as choice cutouts decreased 1.46 to 270.22 and select decreased 2.32 to 257.97. The choice/ select spread widened to 12.25 and the load count was 227.
Wednesday’s estimated slaughter is 122,000, which is above last week’s 121,000 and above last year’s 119,000. The estimated total (so far) for the week is 365,000, which is even with last week and above last year’s 359,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading has been mostly inactive on very light demand in Kansas and the Western Cornbelt. 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 from 135.00 – 140.00 and from 215.00 – 218.00 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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