Walsh Trading Daily Insights
Commentary
July Lean Hogs opened lower, and was able to temporarily stop the selling as it rebounded and traded to the high of the session at 53.20. It failed from here, breaking down to a new low for the down move, trading down to 51.55 and settling nearby at 51.675. Settlement was below the 51.80 support level and it ended the week on weakness. A weak open on Monday could lead to more pressure on price. Support on Monday is at 50.475, 49.35 and then 46.30. Resistance is at 51.80, 53.825, 54.775 and then 55.625. The Pork Cutout Index and the Lean Hog Index continued their decline. The Pork Cutout Index fell and is at 70.19 as of June 11, 2020. The Lean Hog Index also fell and is at 49.99 as of June 10, 2020. Estimated Slaughter for Friday is at 438,000, this is below last week’s slaughter of 443,000 and last year’s slaughter at 465,000. Estimated slaughter for Saturday at 230,000 will bring the estimated slaughter level to 2,457,000. This would put slaughter above last year’s 2,439,000. Saturday slaughter for last year was only 70,000. It looks like slaughter levels are stabilizing at a range from 438,000 to 450,000 for Monday through Friday. Saturday slaughter will have to stay at higher levels to make up the daily shortfall and either keep pace with or surpass last year’s slaughter. It will have to stay above last year’s slaughter to eat through any back-logged supply. August Feeder Cattle opened strong and rallied to resistance at 133.50. It was stopped cold here (133.50 was the high) and failed. Price retreated the remainder of the day and it made the low at the end of the day at 130.65. It settled on support at 131.10. An open below 131.10 on Monday has support at 129.65, 128.875 and then 127.575. Resistance is at 132.075, 133.50, 134.25 and then 135.60. The Feeder Cattle Index increased and is at 129.58 as of 6/11/2020. August Live Cattle tried to rally early but was stopped right at resistance at 97.075 (high of day). It broke down to a new low for burgeoning down move at 95.15. Settlement was at 95.325. Support is at 94.30, 92.15 and then 91.05. Resistance is at 96.10, 97.075 and then 99.375. Boxed beef cutouts continued its descent from record levels and are near last year’s levels. Choice cutouts declined 4.92 to 230.64 and select dipped 0.61 to 219.27. The choice/ select spread narrowed to 11.37 and the load count was 155. Last year’s (6/12/19) cutout prices had choice at 222.40 and select at 207.43. Friday’s estimated slaughter is 115,000, below last week’s 116,000, and last year’s 119,000. Saturday’s estimated slaughter is expected to be at 76,000, which would be above last week’s 63,000 and last year’s 64,000. The weekly total would be 658,000 vs last week’s 636,000 and last year’s 669,000. Slaughter is normalizing between 115,000 to 117,000. As with Hogs, Saturday could be used to attempt to catch up to or surpass last year’s numbers, trying to get rid of the back log in cattle. This week’s slaughter wasn’t able to do that however. The USDA report LM_Ct131 states: So far for Friday in the Southern Plains negotiated cash trading has been at a standstill. The last reported market was on Thursday. In the Texas Panhandle live trades moved at 104.00. In Kansas live trades moved from 103.00 to 107.00. Thus far for Friday in Nebraska and Western Cornbelt negotiated cash trading has been limited on light demand. In Nebraska a few live trades moved at 102.00 and 103.00. However, not enough trades in either feeding region for a market trend. In the Nebraska the last reported dressed market was on Tuesday with trades at 165.00. Thus far for the week live trades have moved from 105.00 to 108.00. Thus far for the week in the Western Cornbelt live trades have moved from 103.00 to 105.00 and dressed trades have ranged from 160.00 to 172.00.
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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