Walsh Trading Daily Insights
Commentary
The livestock markets were pummeled on Wednesday, with cattle markets reversing Tuesday’s gains and Hogs breaking down to a new low. June Hogs broke down below support at 59.825 and traded down to the 50 DMA at 58.01, making the low at 57.70. It settled below the 50 DMA at 57.875. The only positive outcome for trade on Wednesday was that it didn’t settle limit down. Continued pressure in Hogs could see support tested at 57.025 and then 56.10. If the 50 DMA holds then consolidation within Wednesday’s range is possible. Slaughter levels continue to improve with Wednesday’s estimated to be 373,000. This is above Tuesday’s 361,000 and last week’s 312,000, but below last year’s 457,000. The Pork Cutout Index dipped and is at 116.58 as of 5/12/2020. The Lean Hog Index inched higher and is at 65.81 as of 5/11/2020. August Feeder Cattle erased most of Tuesday’s rally ending up as an inside trading day but settling at 133.075, in the lower end of the trading range. It is once again just above the 100 DMA (132.08) after rallying to the 200 DMA (136.11) yesterday. Wednesday’s low was 132.35. The Feeder Cattle Index rose on 5/11/2020 to 123.11 and again on 5/12/2020 to 123.52. I will stick with June Live Cattle today as volume was heavy and real close to a tie with June. June rallied early to a new high for the up-move then crashed. The collapse erased the positive action caused by the new high. It settled in the lower end of the range at 93.875. Once again, the only positive news out of this is it didn’t settle limit down. As it was, settlement was below the normal limit range of 3.00 handles. Support for Thursday is at 92.15 and then 91.05. These price swings signify the difficulty traders are having deciphering the effects the Wuhan Virus is having the processing of cattle and hogs and the buildup of supply as we go forward. Boxed beef cutouts set a new intra-day high today as the morning choice cutouts rose 3.35 to 478.74 and then it too collapsed, possibly implying the top for cutouts may be at hand. Choice and select cutouts crashed, with choice dropping 9.40 to 465.99 and select collapsing 13.73 to 437.24. The choice/ select spread widened to 28.75 and the load count was 132. Slaughter levels continue to improve with estimated slaughter at 91,000 up 2,000 head over Tuesday and above last week’s 82,000. It is still far below last year’s 122,000. Cash traded in all major regions with live cash trades from 110.00 to 117.00 and dressed trades from 170.00 to 185.00.
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 and our next webinar will be on Thursday, May 14, 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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