Walsh Trading Daily Insights
Commentary
The livestock markets started the new month and new week on a sour note. The markets opened lower and tested support levels with cattle markets mostly able to recover and hog’s remaining weak throughout the session. July Lean Hogs opened at the session lows and consolidated near the lows all session. It wasn’t able to trade below Friday’s new low for the down-move however, forming an inside candlestick in the lower part of Friday’s range. China has told state run companies to halt purchases of US pork and another plant temporary shutdown slowing the recovery in slaughter levels, the main culprits in my opinion. Support on Tuesday is at 54.775, 53.825 and then 51.80. Resistance is at 55.625, 56.10 and then 57.025. Estimated Slaughter for Monday is at 403,000, this is above last week’s holiday slaughter of 2,000. This is below last year’s slaughter at 465,000. The Pork Cutout Index fell and is at 92.07 as of 5/29/2020. The Lean Hog Index dropped and is at 61.25 as of 5/28/2020. August Feeder Cattle opened lower and broke down to test support at 132.075, making the low above it at 132.525. It recovered and surged to the high for the session at 136.725. This is above long-term resistance at the 200 DMA (135.75) and in a positive development settled above it at 136.125. Support is at 135.60, 134.25 and then 133.50. Resistance is at 136.75, 138.95 and 140.775. The Feeder Cattle Index decreased and is at 1258.96 as of 5/29/2020. August Live Cattle opened lower and broke down to the session low at 96.925. This is just below support at 97.075. It also surged, trading to its session high at 99.975. Settlement was 98.975. Support is at 97.075,96.10 and then 94.30. Resistance is at 99.375,100.275 and then 101.625. Boxed beef cutouts continued its descent from record levels. Choice cutouts crashed 22.19 to 341.15 and select collapsed 23.24 to 316.83. The choice/ select spread widened to 24.32 and the load count was 166. Slaughter levels are leveling off around the 110,000 mark. Monday’s estimated slaughter is 110,000, above last week’s holiday shortened 4,000, but still below last year’s 122,000. Slaughter for the week is expected (“hoped”) to top 600,000 for the first time in weeks. The USDA report LM_Ct131 states: Thus far for Monday, trade was light on light to moderate demand in all feeding regions. Compared to last week in the Southern Plains, early live purchases traded unevenly steady compared to the bulk of last week, at 118.00. In Nebraska, compared to the bulk of last week, early live and dressed purchases traded unevenly steady at 118.00, and from 178.00-187.00, bulk at 187.00. In the Western Cornbelt compared to last week early dressed purchases traded unevenly steady from 180.00-187.00. The latest established live market in the Western Cornbelt was last week, with live purchases from 114.00—115.00. The Monday range for cash live cattle so far is 114.00 -118.00. Dressed sales are from 178.00 – 187.00.
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 Friday, June 5, 2020 at 2:00 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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