Walsh Trading Daily Insights
Commentary
Livestock markets were drifting this morning, trading both sides of unchanged as traders continued to consolidate futures prices. The fedcattleexchange.com auction took place with 5,119 head for sale and 679 sold at nondescript prices. Trades took place at 95.00 and 95.25. No big deal…Prices in lower end of established trading ranges. Then suddenly the USDA reports trades in both Texas and Kansas taking place at 110.00 on a live basis and reports of dressed sales taking place in Iowa at 180.00 set cattle markets soaring. Euphoria over these sales took cattle markets up their respective limits and despite some down-ticks in certain contract months cattle markets settled up limit. With boxed prices stampeding to new records on a seemingly daily basis, at least one packer decided to share the wealth for a day. It sets a new standard in my mind for future price action in the cash markets. The big jump in prices (if it continues), leaves futures way under cash once again…even with the limit up move. Any rejection of this price jump could send prices down just as fast as they climbed, in my opinion. Let’s keep feeding the bull… Lean Hog prices also were higher with June Hogs settling up 1.30 on the day. The Hog price action just continued its consolidation of Monday’s big rally. Slaughter levels were higher on Wednesday as estimated cattle slaughter came in at 82,000 and estimated Hog slaughter at 3212,000. These are improvements over last week’s low levels at 72,000 for cattle and 266,000 for Hogs. Slaughter levels remain way below last year’s levels, but the increases are encouraging. Every day is a new adventure as packers do not know how many employees will show up for work at the slaughtering plants. As I write I am watching the President and Vice President meeting with the Governor of Iowa and discussing the attempts to keep meat processing plants open. Boxed Beef Cutouts continued its now daily surge to record highs, this time seeing choice cutouts up 20.19 to 449.18 and select cutouts up 21.25 to 431.96. The choice cutouts set a new closing high, but this morning choice cutouts were higher, setting an intra-day high at 450.81. The choice/ select spread narrowed to 17.22 and the load count was 110. The Feeder Cattle Index dipped and is at 119.50 as of 5/05/2020. The Lean Hog Index was higher and is at 60.35 as of 5/04/2020. The Pork Cutout Index continued to leap over tall buildings and is at 104.57 as of 5/05/2020.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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