Walsh Trading Daily Insights
Commentary
February Lean Hogs opened lower, broke down past support at 75.60 to the session low at 75.35. The market found support here and rallied to the high at 77.05 before pulling back and settling at 76.05. The session formed a small bodied candlestick indicating indecision in the market, in my opinion. Cash continues to struggle as weights continue to move higher and cutouts haven’t been able to hold on to any morning strength until today. Could this mean that we will see a turn-around in cash and cutout prices? We’ll see…. We have export sales out before the open and this could have an effect on futures prices on Thursday. A failure from settlement could see price re-test support at 75.60 and then move towards support at 74.25. If settlement holds, we could revisit resistance at 76.75 and then possibly 77.80.
The Pork Cutout Index decreased and is at 83.40 as of 12/07/2021.
The Lean Hog Index increased and is at 70.94 as of 12/06/2021.
Estimated Slaughter for Wednesday is 472,000, which is below last week’s 480,000 and last year’s 492,000. The weekly estimated total the week (so far) is 1,396,000, which is below last week’s 1,443,000 and last year’s 1,473,000.
January Feeder Cattle opened at the high (164.975) and then traded lower the rest of the session to the low at 163.025. It settled at 163.40. Settlement was below the 163.50 support level as worries about the lack of activity in the fat cash market and inability of live cattle futures to move higher kept feeders in check despite a high level in the index. We are coming closer to the end of the year and a slowdown in feeder sales so traders seem to be looking closer at the fat market for hints to future price action in my opinion. If settlement holds, we could see a re-test of resistance at 165.775. A failure from settlement could see price test support at 162.00.
The Feeder Cattle Index increased and is at 161.16 as of 12/07/2021.
February Live Cattle opened lower and rallied to the session high at 139.40. It couldn’t sustain the positive price action and grinded lower the rest of the session to the low at 138.575. Settlement was at 138.675. Lack of activity in the cash market is spooking traders in my opinion and futures have been unable to sustain rallies, leading to consolidation between 140.175 and 138.60. Cash is getting nibbled from 140.00 – 141.00 and futures want to see cash burst higher to follow along. Hence, the consolidation will continue until that occurs, in my opinion. A failure from settlement could see price test support at 136.35. If settlement holds, we could revisit resistance at 140.175.
Boxed beef cutouts were lower as choice cutouts fell 3.92 to 264.11 and select dropped 2.59 to 253.09. The choice/ select spread narrowed to 11.02 and the load count was 161.
Wednesday’s estimated slaughter is 122,000, which is even with last week and above last year’s 119,000. The estimated total for the week (so far) is 367,000, which is above last week’s 365,000 and last year’s 354,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading has been limited on 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 – 141.00 and from 217.00 – 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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