Walsh Trading Daily Insights
Commentary
February Lean Hogs opened lower, made the session high at 78.875 and broke down the rest of the session to the low at 76.125. It settled at 76.55. The breakdown took price below support at 76.75 as worries about near term supply is putting pressure on cash and cutout prices. With weights continuing to rise and slaughter numbers up on the year packers are not having any problems buying hogs at their price and even though demand is good, cutout prices have been declining. This has seen cash prices and cutout prices fall and with futures prices trading above cash, it has led to a selloff in futures as it moves toward the cash price. Cash seems to be trying to find a bottom, but it is two steps up and then one step back as it tries to firm up. A failure from the low could see price test support at 75.60. Support then comes in at 74.25. If settlement holds, we could revisit resistance at 77.80.
The Pork Cutout Index decreased and is at 84.60 as of 12/06/2021.
The Lean Hog Index increased and is at 70.78 as of 12/03/2021.
Estimated Slaughter for Tuesday is 470,000, which is below last week’s 480,000 and last year’s 493,000. Monday slaughter was revised lower to 454,000. The weekly estimated total the week (so far) is 924,000, which is below last week’s 963,000 and last year’s 981,000.
January Feeder Cattle opened higher, then broke down to the session low at 164.25. It found support here and rallied to the high at 165.70. It pulled back and settled at 165.025. Feeders consolidated below the 165.775 resistance level. If Feeder Cattle can get past resistance at 165.775, we could re-test resistance at 167.15 and then the Monday high at 168.30. A failure from settlement could see price re-test support at 163.50. Support then comes in at 162.00.
The Feeder Cattle Index increased and is at 160.96 as of 12/06/2021.
February Live Cattle opened unchanged from Monday’s settlement, made the session high at 139.75 and then broke down to the session low at 138.825. It consolidated the rest of the session and settled at 139.225. It formed an inside candlestick as it range was within the Monday trading range. Cash is getting nibbled at 140.00 – 140.50 and futures want to see cash move higher to follow along. Hence, consolidation until that occurs, in my opinion. Futures are stuck between support at 138.60 and resistance at 140.175. A rally past resistance at 140.175 could see price work its way to the November 29 high at 141.85. Resistance then comes in at 142.25. A failure from settlement could see price re-visit the Monday low. Support then comes in at 136.35.
Boxed beef cutouts were lower as choice cutouts fell 4.50 to 268.03 and select dropped 2.17 to 255.68. The choice/ select spread narrowed to 12.35 and the load count was 159.
Tuesday’s estimated slaughter is 123,000, which is above last week’s 122,000 and last year’s 116,000. The estimated total for the week (so far) is 245,000, which is above last week’s 243,000 and last year’s 235,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been mostly inactive on very light demand in Nebraska and the Western Cornbelt, not enough purchases in either region for a market trend. Negotiated cash trade has been at a standstill in all other major feeding regions. Last week in the Southern Plains and Colorado live purchases traded at 142.00. In Nebraska and the Western Cornbelt last week live and dressed purchases traded at 140.00 and 220.00, respectively.
The USDA is indicating cash trades for live cattle from 140.00 – 140.50 and at 220.00 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 9, 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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