Commentary
July Lean Hogs broke down to a new low for the down move, trading down to 52.45 before up-ticking at the end of the day to settle at 52.975. The Pork Cutout Index and the Lean Hog Index are falling apart after a strong rally. The collapse in value of thee Indices are putting downward pressure on futures prices, in my opinion. The Pork Cutout Index has fallen from a high at 116.99 on May 3rd to 73.64 as of June 8, 2020. It is well below last year’s 84.35 as of June 7, 2019. The Lean Hog Index peaked at 68.87 on May 13th and has fallen to 51.93 as of June 5, 2020. There usually is a 2-day lag in reporting. On June 6,2019 the Lean Hog Index was at 80.30. Support on Wednesday is at 51.80, 50.475 and then 49.35. Resistance is at 53.825, 54.775, 55.625, and then 56.10. Estimated Slaughter for Tuesday is at 450,000, this is above last week’s slaughter of 417,000 and below last year’s slaughter at 472,000. August Feeder Cattle was weak at the start of the trading session. It opened lower and broke down taking out the June 1st low (132.525), and making a new low at 131.525. Price consolidated and then rallied to the session high at 134.875. It dipped and settled at 134.25. It is back in the middle of the trading range, with the high at 136.725. The new low just extended the trading range low, in my opinion. Settlement was right on the 134.25 resistance level. Support is at 133.50, 132.075, 131.10 and then 129.65. Resistance is at 135.60, 136.75 and then 138.95. The Feeder Cattle Index increased and is at 129.52 as of 6/8/2020. August Live Cattle opened lower and extended the trading range with a new low at 95.60. It consolidated and then rallied to the session high at 98.325. Settlement was at 96.325. This is also the middle of its trading range with the high at 101.30. Support is at 97.075, 96.10 and then 94.30. Resistance is at 99.375, 100.275 and then 101.625. Boxed beef cutouts continued its descent from record levels. Choice cutouts declined 7.58 to 247.00 and select decreased 3.17 to 227.95. The choice/ select spread narrowed to 19.05 and the load count was 230. Slaughter levels are rising and approaching last year’s levels. Tuesday’s estimated slaughter is 117,000, above last week’s 116,000, and below last year’s 122,000. The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading has been at a standstill in the Southern Plains. In Nebraska and Western Cornbelt negotiated cash trading has been very limited on very light demand. In the Western Cornbelt a few dressed trades moved at 166.00. However, not enough trades for a market trend in these regions. Last week in the Southern Plains the bulk of live trades ranged from 105.00-117.00. For the prior week in Nebraska the bulk of live and dressed trades moved from 110.00-118.00 and 175.00-185.00, respectively. For the previous week in the Western Cornbelt live trades moved from 108.00-114.00 and the bulk of dressed trades moved from 175.00-185.00.
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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