Walsh Trading Daily Insights
Commentary
With a country-wide re-opening for business plan announced in front of the open, the livestock markets showed early optimism. The Cattle markets opened higher and traded to the session highs, while Hogs opened higher made the low then raced to its high. The Euphoria didn’t last however, as they all broke down with the Cattle markets racing to their low for the day and the Hogs challenging its low. Trade settled in and the markets traded in the lower end of their ranges for the rest of the session. Today’s trading simply consolidated Thursday’s gains for the Cattle markets and Hogs spent its third day within Tuesday’s new low for the down move wide candlestick. The re-opening plan is a positive step in moving away from the Wuhan virus that has shut down our country (and world), but the virus is still with us and the plan is left up to the individual governors to implement as this is only a guide for a staggered relaxation of the stay at home mandates. The processing plant shut-downs and slow-downs remain in place as packers search for a way to protect employees while they complete their tasks. This has drastically reduced slaughter levels the past couple of weeks and slaughter this week collapsed even more with estimated slaughter for the week at 502,000 (includes Saturday), down from last week’s 536,000 and last years’ 642,000. The lower slaughter has led to a leap in cutout prices with cutouts for choice beef up 3.12 to 238.99 and select up 1.22 to 227.20. The choice / select spread widened and is at 11.79 and the load count was 89. This continues to be a boon for the packers while putting extreme pressure on producers. Plants are hoped to come online sooner rather than later as packers should be incentivized to keep slaughter flowing with the high cutout prices. Demand seems to be stable for the time being as exports are good and consumers are still buying beef in the grocery stores, in my opinion. Cash has traded in a wide range with live cattle at 94.00 to 105.00 and dressed from 150.00 – 168.00. The Feeder Cattle Index rose and is at 115.75 as of 4/16/20. The Lean Hog Index fell and is at 45.72 as of 4/15/20. The Pork Cutout Index rose and is at 53.31 as of 4/16/20.
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 and our next webinar will be on Thursday, April 23,2020 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.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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