Commentary
August Lean Hogs opened higher, rallied to the session high at 50.35 closing some more of the 50.60 – 49.375 gap then broke down and traded to the session low at 49.20. It settled near the low at 49.275. Hogs are in a downtrend in my opinion and the gap has been strong resistance. Support on Tuesday is at 47.825, 46.30 and then 43.05. Resistance is at 49.35, 50.475 and then 51.80. The Pork Cutout Index increased and is at 64.94 as of July 2, 2020. The Lean Hog Index decreased and is at 45.02 as of July 1, 2020. Estimated Slaughter for Monday is at 452,000. This is below last week’s slaughter of 468,000 and last year’s slaughter at 483,000.
August Feeder Cattle traded to resistance at 136.75, making the high just below it at 136.675. It settled just below the high at 136.15. It is still trading in the 138.80 – 128.325 trading range, but is now attempting to clear the 200 DMA now at 135.75. Settling above the 200 DMA is positive for the market in my opinion. Price needs to clear resistance at 136.75 and then the trading range high which would create some distance from the 200 DMA. Price is right near the 200 DMA and another failure from here could see price revisit the rising 50 DMA now at 132.37. Tuesday has support at 135.60, 134.25, 133.50 and then 132.075. Resistance is at 136.75, 138.95 and then 140.775. The Feeder Cattle Index dipped and is at 128.88 as of 7/2/2020.
August Live Cattle opened strong and surged early in the trading session to the high at 101.425. The high took out the May 28th high at 101.30 which is positive for the market. Price however, couldn’t sustain its gains and failed, trading to the session low at 99.725. This keeps price in its trading range, in my opinion with a new high (101.425 – 93.575). If cattle can’t hold Monday’s low, price could revisit the middle of the trading range. Settlement was 100.10. Support is at the 99.35, 98.125 and then 97.075. Resistance is at 100.275, 101.625 and then 103.00. Boxed beef cutouts were mixed on Monday with choice cutouts up 0.02 to 205.46 and select down 1.79 to 196.97. The choice/ select spread widened to 8.49 and the load count was 169. Monday’s estimated slaughter is 119,000, below last week’s 121,000 and even with last year’s slaughter. The USDA report LM_Ct131 states: Thus far Monday negotiated cash trade was slow on light demand in the Western Cornbelt. Compared to last week in the Western Cornbelt a few early dressed purchases traded 5.00-7.00 higher at 160.00. The latest established live market in the Western Cornbelt was last week, with live purchases from 96.00-97.00. Trade was limited on light demand in Kanas and Nebraska. A few early live purchases traded from 93.00-95.00 in Kansas with a few early dressed purchases in Nebraska at 160.00. However not enough purchases in either region for an adequate market test. Trade was inactive on light demand in all other regions. The latest established market in the Texas Panhandle was last week with live purchases from 93.00-95.00. In Kansas last week, live purchases traded mostly at 95.00. Last week in Nebraska live purchases traded from 95.00-96.00 with dressed purchases from 154.00-155.00. Last week in Colorado, live purchases traded mostly at 96.00.
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, July 9, 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.