Walsh Trading Daily Insights
Commentary
February Lean Hogs opened higher, traded to the session low at 77.40 and rallied the rest of the session to the high at 81.15 and settled near the high at 81.025. The rally gathered steam after getting past resistance at the 50 DMA (78.50) as stops were hit and shorts covered in earnest going into the weekend. The rally stopped just short of closing the breakdown gap from the low on December 3 at 81.20 to the high on December 6 at 80.925. Interesting how that happens. Traders will use Monday to see if they can take it past the gap or this was just a selling opportunity at the partial gap close. A failure from settlement could see price re-test support at 80.45 and then 79.80. Support then comes in at 78.80. If settlement holds, we could test resistance at 81.70 and then the nearby 100 DMA at 82.10. Resistance then comes in at 83.325.
The Pork Cutout Index decreased and is at 84.88 as of 12/09/2021.
The Lean Hog Index increased and is at 70.95 as of 12/08/2021.
Estimated Slaughter for Friday is 476,000, which is above last week’s 474,000 and below last year’s 490,000. Saturday’s slaughter is expected to be 256,000, which is below last week’s 260,000 and last year’s 295,000. The weekly estimated total the week (so far) is 2,601,000, which is below last week’s 2,657,000 and last year’s 2,755,000.
January Feeder Cattle opened lower and continued to the low at 163.725. The low came in just above support at 163.50 as bulls took charge and rallied price to the high at 165.50. This is just below resistance at 165.775 and Feeders consolidated the rest of the session unable to push higher. It settled at 164.875. Feeders continued its consolidation between the support and resistance levels. The Feeder Index is still strong but we are approaching holiday season and the feeder market quiets down till the new year. Futures right now are reflecting this reality, unable to take futures out of its trading zone. Hopefully cash can rally more and spark a higher trade in futures. If not, the consolidation could continue. If settlement holds, we could see a re-test of resistance at 165.775. A breakout above here could see price challenge resistance at 167.15. A failure from settlement could see price revisit support at 163.50.
The Feeder Cattle Index decreased and is at 161.51 as of 12/09/2021.
February Live Cattle opened lower at 137.60 which turned out to be the low of the day and then rallied to the session high at 138.375. It consolidated the remainder of the day and settled at 138.075. The lower open was just below the 137.875 support level and the high was just below resistance at 138.60. The cash market looks like it traded steady this week with the live cattle range from 134.00 – 142.00. A failure from settlement could see price re-test support at 137.875. Support then comes in at 136.35. If cattle can rally past 138.60, we could revisit resistance at 140.175.
Boxed beef cutouts were mixed as choice cutouts down-ticked 0.01 to 264.54 and select increased 0.56 to 252.24. The choice/ select spread narrowed to 12.30 and the load count was 75.
Friday’s estimated slaughter is 121,000, which is above last weeks and last year’s 119,000. Saturday slaughter is expected to be 58,000, which is below last week’s 69,000 and last year’s 70,000. The estimated total for the week (so far) is 668,000, which is below last week’s 676,000 and above last year’s 664,000.
The USDA report LM_Ct131 states: Thus far for Friday in the Northern Plains and Western Cornbelt negotiated cash trading has been limited on light demand. Not enough purchases for a full market trend. Thursday in Nebraska and Western Cornbelt live purchases traded from 138.00-140.00 and dressed purchases traded at 220.00. Last week in Colorado live purchases traded at 142.00. So far for Friday in the Southern Plains negotiated cash trading has been at a standstill. Wednesday live purchases traded at 140.00.
The USDA is indicating cash trades for live cattle from 134.00 – 142.00 and from 217.00 – 221.00 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 16, 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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