Commentary: August Lean Hogs consolidated near the lows. It was able to eat into by a few ticks the above gap but just drifted for the most part. Back months faired better as they were up over a handle on the day. The gap from Thursday’s low at 50.60 to Friday’s high at 48.95 narrowed slightly with the session high at 49.375. This is a tick above resistance at 49.35. Settlement was nearby at 49.025. Hogs are in a downtrend in my opinion and the gap could be strong resistance. Support on Wednesday is at 47.775, 46.30 and then 43.05. Resistance is at 49.35, 50.475 and then 51.80. The Pork Cutout Index ticked higher and is at 65.28 as of June 29, 2020. The Lean Hog Index was unchanged and is at 45.23 as of June 26, 2020. Estimated Slaughter for Tuesday is at 469,000. This is above last week’s slaughter of 457,000 and below last year’s slaughter at 480,000.
August Feeder Cattle surged early in the trading session reaching the high at 135.675. This is just below resistance at the 200 DMA at 135.78. It failed miserably as it fell apart and traded to the low of the day at 132.275. I believe the breakdown was the result of the bullish corn acreage report that led to a rally in corn futures, in my opinion. It settled near the low at 132.85. The battle continues with settlement in the middle of its 138.80 – 128.325 trading range. Wednesday has support at 132.075, 131.10 and then 129.65. Resistance is at 134.25, 135.60 and then 136.75. The Feeder Cattle Index has declined the past two reporting periods and was at 129.68 as of 6/26/2020 and then 129.42 as of 6/29/2020.
August Live Cattle inched past the Tuesday high early in the session reaching 98.15 but with the high and resistance at 98.125 it was too much for the market to sustain the rally. Plus, it broke through the 100 DMA at 97.15 and it acted like a magnet pulling price back towards it. The bullish corn report didn’t help. You also had June surprise and break down hard to settle at 91.65. The weakness in June at the end of its trading life makes August rallies suspect in my opinion. The consolidation continues. Support is at 96.10, 94.30, the rising 50 DMA at 94.19, trendline support at 93.425 and then 92.15. Resistance is at the declining 100 DMA on the continuous chart at 97.15, 98.125, 99.375 and then 100.275. Boxed beef cutouts resumed their trek lower on Tuesday with choice cutouts down 1.39 to 206.97 and select down 0.81 to 199.90. The choice/ select spread narrowed to 7.07 and the load count was 174. Tuesday’s estimated slaughter is 121,000, above last week’s 120,000 and below last year’s slaughter of 123,000. This is a shortened kill week due to the July 4th holiday on Saturday. The USDA report LM_Ct131 didn’t update properly so I do not have today’s reported trades.
Trade Suggestion(s)
Risk/Reward
Futures N/A
Options N/A
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Ben DiCostanzo
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Walsh Trading, Inc.
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