Walsh Trading Daily Insights
Commentary
Livestock markets were weak on Wednesday giving back a lot of Tuesday’s gains. Equity markets were hit hard along with Crude Oil as Wuhan virus fears reared its ugly head. The virus seems to be picking up steam in states that have re-opened stoking fear that the economy will shut down again and cause demand to crater. The positive aspect to the livestock decline is the breakdowns in price couldn’t eat away all of Tuesday’s gains as each of the lead contract months formed inside candlesticks. August Lean Hogs was the weakest of the bunch settling down 1.25 at 51.25. It opened lower and couldn’t generate any strength as its high was at 52.45, which is below the Tuesday settlement. The low was 51.15. With the inside candle in place and the settlement near the low, a break down from the low could challenge the June 22 low at 50.425. Support for August Lean Hogs on Thursday is at 50.475, 49.35 and then 47.325. Resistance is at 51.80, 53.825 and then 54.775. The Pork Cutout Index dipped and is at 64.55 as of June 23, 2020. The Lean Hog Index inched higher and is at 45.17 as of June 22, 2020. Estimated Slaughter for Wednesday is at 468,000, this is above last week’s slaughter of 460,000 and below last year’s slaughter at 473,000. August Feeder Cattle opened at Tuesday’s settlement and rallied to the session high at 134.45. The rally failed and price broke down to the low at 131.80. Price recovered and settled at 132.875. Price settled in the lower end of the inside candle’s trading range. Wednesday has support at 132.075, 131.10 and then 129.65. Resistance is at 133.50, 134.25, 135.60 and then 136.75. The Feeder Cattle Index increased and is at 129.12 as of 6/23/2020. August Live Cattle opened at Tuesday’s settlement and traded to the session high at 97.85. The Tuesday high at 98.125, resistance at the declining 100 DMA at 98.105, horizontal line resistance at 98.125 and outside market weakness all proved too much for cattle and the market fell, trading to the session low at 96.025. Price attempted to recover from the low but in the end settled nearby at 96.35. Support is at 96.10, 94.30 and then 92.15. Resistance is at the declining 100 DMA on the continuous chart at 98.105, 98.125, 99.375 and then 100.275. Boxed beef cutouts declined with choice cutouts down 2.12 to 209.69 and select decreased 1.88 to 201.69. The choice/ select spread narrowed to 8.00 and the load count was 196. Tuesday’s estimated slaughter is 120,000, even with last week’s slaughter, and below last year’s 123,000. The USDA report LM_Ct131 states: Thus far Wednesday, trade and demand was moderate in Nebraska. Compared to last week, live purchases traded 3.00-4.00 lower from 95.00-98.00. Dressed purchases compared to Tuesday, traded 1.00-2.00 higher from 155.00-156.00, bulk at 156.00. Trade was light on light to moderate demand in the Southern Plains and the Western Cornbelt. In Kansas compared to last week, early live purchases traded mostly 5.00 lower from 95.00-97.00, bulk at 97.00. In the Western Cornbelt, compared to Tuesday, dressed purchases traded steady to 1.00 higher from 155.00-156.00, bulk at 156.00. Live purchases on Tuesday traded at 98.00. In the Texas Panhandle a few early live purchases traded at 97.00, however not enough for an adequate market trend. Last week in the Texas Panhandle live purchases traded from 98.00-102.00.
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 (except holiday weeks’) and our next webinar will be on Thursday, June 25, 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.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
www.walshtrading.com
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (WTI) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.