Commentary
October Lean Hogs broke down and tested support at 49.35 making the low just below it at 49.10. It settled above support at 49.825. October Hogs are consolidating between 51.675 to 49.025. Hogs are in a downtrend and face resistance at 50.475, 51.075 (down sloping trendline), 51.80 and then 53.825. Support is at 49.35, 47.825 and then 46.30. The Pork Cutout Index decreased and is at 70.02 as of July 28, 2020. The Lean Hog Index was higher and is at 51.10 as of July 27, 2020. Estimated Slaughter for Thursday is at 477,000. This is higher than last week’s slaughter of 472,000 and above last year’s slaughter at 472,000.
September Feeder Cattle continued its retracement of Monday’s losses. It is now at the critical 61.8 % retracement of the breakdown from 144.80 to 139.275 on Monday. Settlement was just below the retracement level (142.68) at 142.575. A failure from here could see price revisit Monday’s low. Resistance is at 143.50, 144.25 and then 145.05. Feeder Cattle is still in an uptrend, in my opinion. Support is at 142.40, 140.775, 138.95, 136.75 and then 134.25. The Feeder Cattle Index ticked higher and is at 139.83 as of 7/29/2020.
October Live Cattle has recouped nearly all of Monday’s decline, reaching a high at 106.40 which is just shy of Monday’s high at 106.60. Settlement was at 106.05. A push higher could lead to a test of resistance at the 200 DMA (continuous chart) at 107.92. Resistance comes in at 107.30, 108.65 and then 109.60. If price fails from settlement a test of support at 104.20 is possible. Support is at 106.025, 104.85 -104.20 and then 103.00.
Boxed beef cutouts were mixed with choice cutouts down 1.85 to 201.11 and select up 1.17 to 189.49. The choice/ select spread narrowed to 11.62 and the load count was 174.
Wednesday’s estimated slaughter is 119,000, above last week’s 117,000 and below last year’s slaughter of 121,000.
The USDA report LM_Ct131 states: So far for Wednesday in the Texas Panhandle negotiated cash trading and demand have been moderate. Compared to last week live purchases moved mostly 1.00 higher at 97.00. In Kansas negotiated cash trading has been moderate with good demand. Compared to the prior week live purchases moved mostly 1.00 higher at 97.00. In Nebraska and Western Cornbelt negotiated cash trading has been slow with light demand. In Nebraska a few dressed purchases moved at 160.00. In the Western Cornbelt a few live and dressed purchases moved at 101.00 and 160.00, respectively. However, not enough for a full market trend. In Nebraska last week live purchases moved at 98.00 and dressed purchases moved at 158.00. In the Western Cornbelt last week live purchases moved from 99.00 to 100.00 and dressed purchases moved at 158.00. Thus far for Wednesday in Colorado negotiated cash trading was inactive on very light demand. Not enough purchases for a market trend. Last week live and dressed purchases moved at 98.00 and 158.00, respectively.
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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