Livestock Report

Ben DiCostanzoGeneral Commentary

Walsh Trading Daily Insights


June Lean Hogs consolidated within the lower end of Monday’s trading range, trading in a narrow range as price is trading below long-term resistance and above short-term support. The 100 DMA on the continuous chart is declining and is at 62.90. The 200 DMA is above the100 and also declining at 64.85. The rising 13 DMA is at 60.20 and it was tested successfully on Tuesday with the low at 60.10. The flat 50 DMA is next at 58.13. Pork Cutout values collapsed today (-8.84) and could be signaling a peak coming in the Pork Cutout Index. The Pork Cutout Index jumped to 116.87 as of 5/11/2020. The Lean Hog Index may have peaked on 5/7/2020 at 67.00 as the current index fell to 65.75 as of 5/8/2020. Slaughter levels are starting to increase as more plants are coming online and increasing capacity. Estimated slaughter for Tuesday is at 361,000, up from last week’s 298,000 but still way below last year’s 455,000. Today will probably be the last mention of June Live Cattle as the August volume surpassed June’s volume today. I like to give it a day or two to see if volume sticks. The price action continues it wild runs in June with limit moves almost on a daily basis with some of them sticking to lead to expanded limits. Today was such a day. Yesterday’s limit down move lead to expanded limits for the Cattle markets. Today didn’t disappoint if you like big swings in direction. The past three day’s aggressive price action created an Evening Star candlestick pattern. This could have sent price down to test the gap created from Thursday’s gap open higher from Wednesday’s limit up close. Thursday’s low is 91.625 and Wednesday’s high and settlement was 89.475. In my opinion, a run down to close the gap would have been a great buying opportunity, but we never got the chance. A higher open and after a couple of weak attempts to trade lower failed Cattle rose and the kept going up, up and up till it couldn’t go any more, reaching its limit at a high of 97.175.  It is still below the Friday expanded limit high at 98.475, so another reversal in these wacky trading sessions is possible. This would keep the bearish formation intact, in my opinion. A continuation higher on Wednesday could see price make a new high as the cash market continues to impress with dressed cattle trading a few at 185.00 and live cattle trading well above futures from 105.00 to 110.00. This is lower than yesterday’s 115.00 sales, but price seems to being going higher as boxed beef cutouts continue to make new highs and Packers are under extreme scrutiny from the Federal Government. Cutouts made and intra-day high this morning up 7.10 to 475.68 for choice and ended the session at closing highs up 6.81 to 475.39. Select fell 2.00 to 450.97 after making an intra-day high this morning, up 0.66 to 453.63. The choice/ select spread widened to 24.42 and the load count was 132. Slaughter levels were estimated at 89,000 which is slightly above last Tuesday’s 80,000, but still way below last year’s 122,000. The two-day total stands at an estimated 175,000, above last week’s 155,000 and below last year’s 241,000. August Feeder Cattle found support at the 100 DMA (132.19) on the continuous chart, making the session low just above it at 132.275 and following the fats higher, eating up most of Monday’s big decline. The 200 DMA (136.15) is resistance and it settled just below it at 135.75. The high was 136.475. The Feeder Cattle Index was higher for 5/8/2020 at 122.60. (I haven’t received an update for today as I write this article.)

Trade Suggestion(s)


Futures N/A

Options N/A

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Ben DiCostanzo

Senior Market Strategist

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