Walsh Trading Daily Insights
Commentary
August Lean Hogs tested resistance at 51.80 for the second day in a row, this time falling short with the Tuesday high at 51.675. Hogs broke down and approached support at 49.35, making the low just above it at 49.70. It settled at 49.925. It formed an inside candlestick. A break below the Tuesday low could see price test support at 47.825, in my opinion. Support on Wednesday is at 49.35, 47.825, 46.30 and then 43.05. Resistance is at 50.475 and then 51.80. The Pork Cutout Index increased and is at 66.38 as of July 13, 2020. The Lean Hog Index was higher and is at 45.62 as of July 10, 2020. Estimated Slaughter for Tuesday is at 475,000. This is higher than last week’s slaughter of 469,000 and last year’s slaughter at 473,000.
August Feeder Cattle traded within Monday’s trading range, forming an inside candlestick. It settled at 136.725. It settled above the 200 DMA (135.585), so that is positive in my opinion. A rally above the Tuesday 137.525 could see price test the May 7 high at 138.80. Monday has support at 135.60, the 200 DMA, 134.25, 133.50, the 50 DMA (133.33), and then 132.075. Resistance is at 136.75, 138.95 and then 140.775. The Feeder Cattle Index is strengthening and is at 135.62 as of 7/13/2020.
August Live Cattle retreated on Tuesday, as disappointing early morning cash sales in the Southern Plains at 95.00 helped pressure futures lower. Boxed beef prices declining for choice cutouts to 200.79 in the morning reinforced the negativity. Traders were expecting cash and cutouts to firm this week so the sales and cutouts sent futures lower, in my opinion, trading down to 98.55. It settled at 98.80. Resistance is at 99.375, 101.625 and then 103.00. Support is at 97.075 and then 96.10. Boxed beef cutouts were lower on Tuesday with choice cutouts down 2.34 to 200.92 and select down 1.03 to 190.85. The choice/ select spread narrowed to 10.07 and the load count was 147. Tuesday’s estimated slaughter is 119,000, even with last week and below last year’s slaughter of 122,000. The USDA report LM_Ct131 states: Thus far Tuesday trade and demand was moderate in the Southern Plains. Compared to last week, live purchases in the Texas Panhandle traded steady at 95.00. Compared to last week in Kansas, live purchases traded steady at 95.00, few up to 96.25. Trade was mostly limited on light demand in the Northern Plains and Western Cornbelt. The latest established market in the Northern Plains was last week with purchases 96.00 with dressed purchases mostly at 157.00 in Nebraska. In the Western Cornbelt last week, live purchases traded from 99.00-100.00 with dressed purchases mostly from 157.00-160.00.
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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