Commentary
October Lean Hogs broke down and tested support at 50.475, making the low just above at 50.55. The market was able recover and settled at 51.60, forming a Doji candlestick. If price can hold settlement it could move towards resistance at the down sloping 100 DMA at 53.62. Cutouts and the Lean Hog Index remain firm after making their lows last month. Hogs are still in a downtrend and face resistance at 51.80, the 100 DMA, 53.825, and then 54.775. Support is at 50.475, 49.35, 47.825 and then 46.30.
The Pork Cutout Index jumped higher and is at 70.03 as of 8/11/2020. The Lean Hog Index increased and is at 53.79 as of 8/10/2020.
Estimated Slaughter for Wednesday is 481,000 which is above last week’s 475,000 and below last year’s slaughter at 484,000.
China announced it will auction another 10,000 MT of frozen pork from its state reserves on Aug. 14.
September Feeder Cattle made a new high for the up move on Wednesday, reaching 149.325 before pulling back and settling at 147.95. The high was just below resistance at 149.975 and the low at 146.575 is just above support at 146.20. If price can continue higher a test of resistance at 151.55 is possible. Resistance is at 148.40, 149.975 and then 151.55. Feeder Cattle is in an uptrend, in my opinion. Support is at 147.30, 146.20, 144.25 and then 143.50. The Feeder Cattle Index increased and is at 142.62 as of 8/11/2020.
October Live Cattle continued its march higher, trading to a new high for the up move at 109.95. This is just above resistance at 109.60. Settlement was just below resistance at 109.575. It is trying to leave the declining 200 DMA (107.59) in the dust and has 110.80 resistance in its sights. Breaking above the Wednesday high could see price test resistance at the 110.80 resistance level. Resistance then comes in at 112.35. Support is at 108.65, the 200 DMA, 107.30 and then 106.025.
Boxed beef cutouts were higher with choice cutouts up 1.01 to 209.09 and select up 0.97 to 195.99. The choice/ select spread widened to 13.10 and the load count was 182.
Wednesday’s estimated slaughter is 117,000, even with last week and above last year’s 115,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in the Texas Panhandle negotiated cash trading has been active with moderate demand. In Kansas negotiated cash trading and demand have been moderate. Compared to last week, in the Southern Plains, live purchases moved mostly 4.00 higher at 104.00. A few in Kansas up to 105.00. Good movement was noted in the Texas Panhandle. So far for Wednesday in Western Cornbelt negotiated cash trading has been slow with light demand. A few live purchases moved at 107.00. However, not enough live and dressed purchases for a full market trend. The last reported market was on Tuesday with live and dressed purchases moving at 105.00 and from 165.00 to 170.00, respectively. Thus far for Wednesday in the Northern Plains negotiated cash trading has been inactive on very light demand. Not enough purchases for a market trend. In Nebraska the last reported dressed purchase market was on Tuesday at 165.00. In the Northern Plains last week live purchases moved at 103.00.
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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