Walsh Trading Daily Insights
Commentary
Today’s price action in the June Lean Hogs finished off the bearish Evening Star pattern, in my opinion. I think Hogs will work its way lower in the coming trading sessions. The cattle markets continue to consolidate, with August Feeder cattle trading in the middle of its 130.95 – 123.475 range and June Live Cattle in the middle of its 89.25 – 80.275 trading range. August Feeders settled at 128.45 and June Live Cattle settled at 84.275. The president’s executive order utilizing the Defense Production Act to mandate packing facilities remain open for business is in effect but implementation could be difficult. Getting employees to show up for work when they fear getting the Wuhan virus will be a challenge, in my opinion. Industry leaders are working with the Administration and the unions to develop a plan for getting people back to work in a safe environment and get the plants processing once again. Tyson has increased its bonus pool for employees that show up for work and its short-term disability coverage to encourage sick employees to stay home. Tuesday’s hog slaughter was revised lower to 278,000 and Wednesday’s slaughter is estimated at 271,000. The three-day total stands at 852,000, below last week’s 1,082,000 and below last year’s 1,410,000. The Pork Cutout Index continues its climb and is at 79.87 as of 4-28-2020. The Lean Hog Index is also rising and is at 49.72 as of 4-27-2020. Tuesday’s estimated cattle slaughter was revised lower to 72,000 and Wednesday’s slaughter is also estimated to be 72,000. The three-day total is estimated to be 221,000. This is down from last week’s 255,000 and last year’s 362,000. This continues to drive cutout prices to record levels and today was no different. Choice cutouts surged 26.56 to 357.38 and select soared 19.03 to 339.91. The choice/ select spread surged and is at 17.47. The load count was 105. The Feeder Cattle Index inched higher and is at 118.83 as of 4-28-2020.
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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