Commentary: October Lean Hogs reversed Friday’s losses closing higher on the day at 50.75. It is consolidating and has formed a ledge with the high at 51.675 and the low at 49.425. The rally did little to change the downward lean to Hogs in my opinion. Hogs are in a downtrend and face resistance at 50.475, 51.575 (down sloping trendline), 51.80 and then 53.825 on Monday. Support is at 49.35, 47.825 and then 46.30. Futures remain weak even with cash and cutouts strengthening. The ledge could lead to attest of resistance at 53.80 on a break out higher. If the low fails support could be challenged at 46.30. The Pork Cutout Index dipped lower and is at 70.11 as of July 24, 2020. The Lean Hog Index was higher and is at 50.13 as of July 23, 2020. Estimated Slaughter for Monday is at 477,000. This is higher than last week’s slaughter of 470,000 and well above last year’s slaughter at 450,000.
September Feeder Cattle opened higher, eking out a new high at 144.80. The rally didn’t last and Feeder’s broke down and made its low at 139.275. This is just above support at 138.95. Settlement was nearby at 139.625. The failure to hold the rally even as the Feeder Cattle Index strengthens could be signaling a tiring market and could lead to a test of the rising 21 DMA at 137.89. Feeder Cattle is still in an uptrend, in my opinion. Resistance is at 140.775, 142.40, 143.50, 144.25 and then 145.05. Support is at 138.95, the 21 DMA, 136.75 and then 134.25. The Feeder Cattle Index rose and is at 139.99 as of 7/24/2020.
October Live Cattle gap opened higher and made the session high at 106.60. It also failed and broke down to the low at 103.725. Settlement was nearby at 103.825. The low was just above the 13 DMA at 103.63. A failure from the low could see the rising 21 DMA tested at 101.61. Resistance is at 104.85 -104.20, 106.025, 107.30, the 200 DMA (107.98), 108.65 and then 109.60. Support is at 103.00, 101.625, the 21 DMA and then 99.375.
Boxed beef cutouts were mixed with choice cutouts up 0.78 to 202.55 and select down 0.50 to 190.13. The choice/ select spread widened to 12.42 and the load count was 94.
Monday’s estimated slaughter is 117,000, even with last week and below last year’s slaughter of 120,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the Southern and Northern Plains. In the Western Cornbelt negotiated cash trading has been inactive on very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases moved at 96.00. For the prior week in the Northern Plains live purchases moved at 96.00 and dressed purchases, in Nebraska, moved at 158.00. For the previous week in the Western Cornbelt live purchases moved from 99.00 to 100.00 and dressed purchases moved at 158.00.
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, July 30, 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
888.391.7894
Fax: 312.256.0109
www.walshtrading.com
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 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.