Commentary
February Lean Hogs broke through trendline resistance and surged to top the 11/5/2020 high (67.60) all the way to the session high at 68.35, briefly going limit up in the session. It couldn’t sustain the high and pulled back to settle at 67.125. This was a spectacular reaction to the bullish engulfing candle and if support at 66.55 can hold, a retest of the high is possible. A failure from support could see price revisit the trendline (66.075). Resistance is at 67.80, the Monday high and then 68.75. Support is at 66.55, 66.075 and then the 21 DMA at 65.82. Vaccines continue to make headlines as more are showing high levels of efficacy, giving hope the pandemic’s days are numbered.
The Pork Cutout Index declined and is at 78.90 as of 11/20/2020.
The Lean Hog Index declined and is at 68.14 as of 11/19/2020.
Estimated Slaughter for Monday is 497,000 which is above last week’s 477,000 and last year’s 493,000.
January Feeder Cattle surged, trading past resistance at 135.60, The 50 DMA (136.50) and 136.75 to the session high at 138.375. It stopped shy of the downward sloping trendline resistance at 138.875 and settled near the high at 137.825. This occurred with corn continuing to move higher. Vaccines rule…. There is strong resistance ahead however, as 138.95 and then the 100 DMA (139.30) lurk just above the trendline. Tuesday will have the trendline at 138.75. The surge and strong settlement created up a bullish morning star candlestick formation. A breakout past the 100 DMA could see price test resistance at 140.775. A failure from settlement could see price consolidate within the Monday range.
The Feeder Cattle Index rose and is at 136.94 as of 11/20/2020.
February Live Cattle gap opened higher and never looked back. It rallied and reached its high at 113.625, which is just shy of resistance at 113.90. The vaccines and the high slaughter levels last week dominated the minds of traders in my opinion. Last week there were persistent rumors of slaughter slowdowns at various plants that proved to be fake news. Slaughter was estimated at 665,000 head which was higher than expected for the week. With cutout prices continuing to climb, packers are full-steam ahead in the slaughter houses. Wouldn’t you? Hopefully this could translate into higher cash prices and with a short week of trading, anything is possible. Cattle settled at 112.90, which is above resistance at 112.35. Resistance is at 113.90 and then 114.65. Support is now at 112.35, 110.80 and then 109.60.
Boxed beef cutouts were higher with choice cutouts up 3.25 to 241.60 and select up 2.50 to 217.48. The choice/ select spread widened to 24.12 and the load count was 122.
Monday’s estimated slaughter is 120,000, which is above last week’s 119,000 and even with last year.
The USDA report LM_Ct131 states: Thus far on Monday negotiated cash trading in the Western Conbelt has been mostly inactive on very light demand. Negotiated cash trading has been at a standstill in all other feeding regions. Not enough purchases in any region for a full market trend. Last week in the Southern Plains and Nebraska live purchases traded at 110.00 and in Nebraska, dressed purchases traded at 172.00. In the Western Cornbelt live purchases traded from 109.00-110.00 and dressed purchases traded at 172.00.
From the USDA:
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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 Wednesday, November 25, 2020 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
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