Walsh Trading Daily Insights
Commentary
Livestock markets started the holiday shortened week on a strong note as August Feeder Cattle settles limit up for the session and July Hogs go limit up and settle just shy of limit up. August Cattle was rallied to the top of its trading range but couldn’t reach 100.00. July Hogs settled at 59.575, just shy of its limit up high at 59.65. China continues to import vast amounts of pork from the US as April imports reached record levels of approximately 400,000 tons, up over 150% from last year. China import totals for the first four months of 2020 reached 1.35 million tons, up approximately 170% from last year. Slaughter levels continue to climb as the estimated slaughter topped 400,000. Support on Wednesday is at 58.25, 57.025 and then 56.10. Resistance is at 59.825, 61.80 and then 63.325. Estimated Slaughter for Tuesday is at 405,000, this is above last week’s 397,000. This is below last year’s slaughter at 477,000. The Pork Cutout Index continues its fall from its peak and is at 99.79 as of 5/22/2020. The Lean Hog Index continues to fall and is at 63.45 as of 5/21/2020. August Feeder Cattle was strong from the open and went locked limit for the day. It settled at 133.30 up limit for the session. Feeder Cattle will have expanded limits on Wednesday. Support is at 132.075, 131.10 and then 129.65. Resistance is at 134.25, 135.60 and 136.75. The Feeder Cattle Index increased and is at 126.96 as of 5/22/2020. August Live Cattle rallied and settled strong at 99.25. This near the session high at 99.675. The rally is tempered by the failure to best the high on May 18th at 100.00. Bears are defending this level with vigor. If they fail in the coming days to keep prices down, there could be stops above this level in my opinion. Support is at 97.075, 96.10 and the 94.30. Resistance is at 100.275, 101.625 and then 103.00. Boxed beef cutouts continued its decline from its record levels. Choice cutouts fell 11.25 to 385.49 and select collapsed 14.16 to 360.02. The choice/ select spread widened to 25.47 and the load count was 222. Slaughter levels are climbing and Tuesday’s estimated slaughter is 106,000, above last week’s 99,000. It is still below last year’s 122,000. The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been limited with light demand in Kansas, Nebraska and Western Cornbelt. In Kansas a few live trades ranged from 110.00 to 120.00. In Nebraska a few live and dressed trades moved at 112.00 and 190.00, respectively. In the Western Cornbelt a few dressed trades ranged from 174.00 to 190.00. However, not enough trades in any of these regions for a full market trend. Last week in Kansas and Nebraska live trades moved from 115.00 to 120.00 and dressed trades, in Nebraska, ranged mostly from 180.00 to 190.00. For the prior week in the Western Cornbelt live trades moved from 114.00 to 115.00 and dressed trades ranged from 180.00 to 190.00. So far for Tuesday in the Texas Panhandle negotiated cash trading has been at a standstill. Last week live trades moved mostly at 120.00.
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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