April Lean Hogs is now the lead contract as its volume has surpassed the February volume. It opened higher and traded to the session low at 88.05. It grinded higher the rest of the session and made the high at 89.40. Settlement was near the high at 89.275. A failure from settlement could see price re-test support at 88.325. If settlement holds, we could test resistance at 90.40. Slaughter picked up on Tuesday, hopefully meaning the absenteeism due to the virus is declining. The hog and cattle markets have seen a drop off in slaughter numbers due to the emergence of the Omicron virus and the fast spreading of the disease, creating sickness and fear in the workforce. This is creating a back up in supply and causing packers to pull back on their bids in both markets, in my opinion. If and when slaughter resumes is normal rates, we can see stronger cash markets as supplies are smaller in number in my opinion. We’ll see…
The Pork Cutout Index increased and is at 88.02 as of 1/17/2022.
The Lean Hog Index increased and is at 75.90 as of 1/14/2022.
Estimated Slaughter for Tuesday is 468,000, which is above last week’s 453,000 and below last year’s 497,000. Monday’s slaughter was revised lower to 395,000. The weekly estimated total is 863,000, which is below last week’s 901,000 and last year’s 919,000.
March Feeder Cattle continued its consolidation on Tuesday, making the high at 166.60, which is below resistance at 167.15 and making the low at 165.25 which is just below support at the flattening 21 DMA at 165.55. It settled below the 21 DMA at 165.425. If settlement holds, we could see a re-test of resistance at 167.15. A breakout above here could see price challenge resistance at the gap from 168.50 – 169.225. A failure from settlement could see price test support at the rising 50 DMA now at 164..025.
April Live Cattle continues to consolidate in the upper region of its trading range, pushing up against the 142.25 resistance level, reaching 142.35 for the Tuesday high. This is just below the Friday high at 142.50 which was a new high for cattle on the continuous chart for this recent rally attempt. The low came in early at 141.425 and settlement was in the middle of the range at 141.85. Resistance remains at 142.25 and support at 140.175. A failure from settlement could see price re-test support at 140.175. If cattle can hold settlement, we could see a test of resistance at 142.25.
Boxed beef cutouts were higher as choice cutouts increased 1.63 to 289.49 and select increased 1.34 to 278.39. The choice/ select spread widened to 11.10 and the load count was 124.
Tuesday’s estimated slaughter is 117,000, which is above last week’s 114,000 and below last year’s 119,000. The estimated total for the week is 230,000, which is above last week’s 227,000 and even with last year.
The USDA report LM_Ct131 states: Thus far for Tuesday in Nebraska negotiated cash trading has been slow on light to moderate demand. Compared to last week dressed purchases traded steady at 218.00. A few live purchases traded at 137.00, however not enough for a market trend. Last week live purchases traded at 137.00. In Kansas and Western Cornbelt negotiated cash trading has been mostly inactive on light demand. Not enough purchases in these regions for a market trend. In the Texas Panhandle negotiated cash trading has been at a standstill. Last week in the Texas Panhandle live purchases traded from 136.00-137.00. In Kansas live purchases traded from 135.00-136.00. Last week in the Western Cornbelt live and dressed purchases traded at 138.00 and 218.00, respectively.
The USDA is indicating cash trades for live cattle from 135.50 – 137.00 and from 217.00 – 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 Friday, January 21, 2022 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.**
Senior Market Strategist
Walsh Trading, Inc.
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.