Walsh Trading Daily Insights
Commentary
August Lean Hogs opened higher, approached resistance at 54.775, making the high at 54.50 and then tanked. It traded down to the session low at 52.70 and settled nearby at 52.80. Settling near the low after failing at resistance after bouncing off a new low for the down move on a Friday is not something you want to see if you are looking for the market to rally. Support for August Lean Hogs on Monday is at 51.80, 50.475 and then 49.35. Resistance is at 53.825, 54.775 and then 55.625. The Pork Cutout Index and the Lean Hog Index continued their decline. The Pork Cutout Index declined and is at 65.79 as of June 18, 2020. The Lean Hog Index fell and is at 46.44 as of June 17, 2020. Estimated Slaughter for Friday is at 457,000, this is above last week’s slaughter of 432,000 and below last year’s slaughter at 458,000. Saturday slaughter is estimated to be 290,000. Last year’s slaughter was only 86,000. The elevated Saturday slaughter put hogs over last year’s slaughter. This week’s total slaughter is estimated to be 2,587,000 and last year was at 2,454,000. Slaughter numbers are starting to catch up to last year’s numbers. We are only 0.7% below last year’s slaughter numbers. August Feeder Cattle did little on Friday. Another tight range low volume session. The range was from 133.55 high to 132.125 low. Settlement was at 132.55. Monday has support at 132.075, 131.10 and then 129.65. Resistance is at 133.50, 134.25, 135.60 and then 136.75. The Feeder Cattle Index is at 128.51 as of 6/17/2020. August Live Cattle traded in a tight 96.55 – 95.225 trading range. It settled at 95.40. It weakened towards the end of the session on low volume as traders sat and waited for the Cattle on Feed report. The report showed: Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.7 million head on June 1, 2020. The inventory was slightly below June 1, 2019. This is the second highest June 1 inventory since the series began in 1996. Placements in feedlots during May totaled 2.04 million head, 1 percent below 2019. Net placements were 1.97 million head. During May, placements of cattle and calves weighing less than 600 pounds were 375,000 head, 600-699 pounds were 305,000 head, 700-799 pounds were 485,000 head, 800-899 pounds were 532,000 head, 900-999 pounds were 235,000 head, and 1,000 pounds and greater were 105,000 head.
Marketings of fed cattle during May totaled 1.50 million head, 28 percent below 2019. Marketings were the lowest for May since the series began in 1996. Support is at 94.30, 92.15 and then 92.15. Resistance is at 96.10, 97.075, 99.375 and then 100.275. Boxed beef cutouts paused in its descent from record levels. Choice cutouts ticked higher 0.16 to 213.72 and select dipped 0.17 to 203.91. The choice/ select spread widened to 9.81 and the load count was 167. Friday’s estimated slaughter is 119,000, above last week’s 115,000, and even with last year’s 119,000. The estimated slaughter for Saturday is 59,000, a disappointing number after last week’s 76,000. It is also below last year’s 64,000. This is not helping the back log of cattle. The USDA report LM_Ct131 states: Thus far Friday trade was mostly inactive on light demand in all feeding regions. Not enough purchases in any feeding region for an adequate market test. The latest established market in the Southern Plains was on Thursday with live purchases at 98.00 in the Texas Panhandle and in Kansas ranging from 98.00-102.00, bulk from 100.00-102.00. On Thursday in Nebraska a few dressed purchases traded from 158.00-160.00. On Wednesday in Nebraska, live purchases traded from 98.00-102.00. On Thursday in the Western Cornbelt, a few dressed purchases traded mostly at 160.00. The latest established live market in the Western Cornbelt was on Tuesday with live purchases from 99.00-102.00.
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 Thursday, June 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.
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