Walsh Trading Daily Insights
Commentary
October Lean Hogs has now retraced most of Tuesday’s loss with today’s rally. Price pierced the declining 100 DMA (53.23) again reaching a high of 53.475 before settling at 53.025. The failure to close above the 100 DMA is a negative in my opinion. A failure from here could see price revisit support at 50.475. If price break above the 100 DMA a test of the Monday high at 54.15 is possible. Cutouts and the Lean Hog Index remain firm after making their lows last month. Hogs are still in a downtrend and face resistance at the 100 DMA, 53.825, and then 54.775. Support is at 51.80, 50.475 and then 49.35.
The Pork Cutout Index was higher and is at 71.58 as of 8/13/2020. The Lean Hog Index decreased and is at 53.48 as of 8/12/2020.
Estimated Slaughter for Friday is 472,000 which is below last week’s 474,000 and above last year’s slaughter at 454,000. Estimated slaughter for Saturday is expected to be219,000. This is lower than last week’s 230,000 and higher than last year’s 140,000. Slaughter for the current week is estimated at 2,565,000 which is above last week’s 2,534,000 and last year’s 2,491,000.
China auctioned another 10,000 MT of frozen pork from its state reserves on Aug. 14.
September Feeder Cattle traded down towards support at 146.20, making the low at 146.325. It settled at 146.575. A breakdown below 146.20 could see price test support at 144.25. Resistance is at 147.30, 148.40, 149.975 and then 151.55. Feeder Cattle is in an uptrend, in my opinion. Support is at 146.20, 144.25 and then 143.50. The Feeder Cattle Index declined and is at 142.25 as of 8/13/2020.
October Live Cattle traded to a new high for the up move at 110.825. This is just above resistance at 110.80. Settlement was below resistance at 110.225. It was a quiet session as the new high failed to generate any real excitement. It formed a Doji candlestick which indicates indecision in the market. If price breaks down below the Friday low at 109.80 a pullback to support at 108.65 is possible. A breakout above the high could see price move towards resistance at 112.35. Resistance then comes in at 113.90. Support is at 109.60, 108.65, the 200 DMA (107.52), 107.30 and then 106.025.
Boxed beef cutouts were higher with choice cutouts up 3.29 to 214.24 and select up 1.88 to 199.29. The choice/ select spread widened to 14.95 and the load count was 126.
Friday’s estimated slaughter is 112,000, above last week’s 109,000 and below last year’s 115,000. Saturday’s slaughter is estimated to be 63,000 which is above last year’s 60,000 and below last year’s 74,000. Slaughter for the week is estimated to be 640,000 which is above last week’s 633,000 and below last year’s 653,000.
The USDA report LM_Ct131 states: Thus far for Friday negotiated cash trading has been slow on light demand in the Northern Plains. Compared to last week live purchases moved 3.00 higher at 106.00 in both regions. In Nebraska dressed purchases moved unevenly steady at 168.00, when compared to Tuesday’s last reported market. So far for Friday in Kansas and Western Cornbelt negotiated cash trading has been limited on light demand. In Kansas a few live purchases moved at 105.00. However, not enough purchases for a market trend in either region. Wednesday was the last reported live purchase market in these regions, with Kansas at 104.00 and in the Western Cornbelt from 106.50 to 107.00. Tuesday was the last reported dressed purchase market in the Western Cornbelt from 165.00 to 170.00. Thus far for Friday in the Texas Panhandle negotiated cash trading has been at a standstill. Wednesday was the last reported live purchase market at 104.00.
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, August 20, 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.
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