Commentary: July Lean Hogs broke down to a new low for the down move, trading down to 51.575 before reversing course and rallying to the high of the day at 53.425. It settled nearby at 52.80. It formed a Doji candlestick indicating indecision in the market, in my opinion. The Pork Cutout Index and the Lean Hog Index continued their decline. The Pork Cutout Index fell and is at 72.52 as of June 9, 2020. The Lean Hog Index decreased and is at 51.77 as of June 8, 2020. Support on Thursday is at 51.80, 50.475 and then 49.35. Resistance is at 53.825, 54.775, 55.625, and then 56.10. Estimated Slaughter for Wednesday is at 450,000, this is above last week’s slaughter of 429,000 and below last year’s slaughter at 482,000. August Feeder Cattle couldn’t take advantage of yesterday’s strong close. It opened lower and failed to take out yesterday’s high. Price retreated to test the prior session’s low and couldn’t take that out. It formed an inside candlestick, staying stuck in the 136.725 to 131.525 trading range. It settled at 132.675, putting price in the lower end of the trading range. Support is at 132.075, 131.10 and then 129.65. Resistance is at 133.50, 134.25, and then 135.60. The Feeder Cattle Index increased and is at 129.70 as of 6/9/2020. August Live Cattle also formed an inside candlestick as it traded within yesterday’s trading range. Settlement was at 96.50. Support is at 96.10, 94.30 and then 92.15. Resistance is at 97.075, 99.375 and then 100.275. Boxed beef cutouts continued its descent from record levels. Choice cutouts fell 10.94 to 236.06 and select decreased 5.11 to 222.84. The choice/ select spread narrowed to 13.22 and the load count was 256. Wednesday’s estimated slaughter is 116,000, above last week’s 114,000, and below last year’s 123,000. The USDA report LM_Ct131 states: So far for Wednesday in the Southern Plains negotiated cash trading has been slow on light demand. Compared to last week the bulk of live trades moved unevenly steady at 108.00. In Nebraska negotiated cash trading has been slow on light demand. A few dressed trades moved from 165.00 to 172.00. However, not enough dressed and live trades for a market trend. The last reported dressed market was on Tuesday with trades at 165.00. Last week live trades ranged from 110.00 to 118.00. In the Western Cornbelt negotiated cash trading has been inactive with light demand. Not enough trades for a market trend. For the previous week in the Western Cornbelt live trades moved from 108.00 to 114.00 and the bulk of dressed trades moved from 175.00 to 185.00. Wednesday saw price break below 100.00 for cash live cattle, making the daily range 98.00 – 108.00.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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