Livestock Report

Ben DiCostanzo General Commentary Leave a Comment

                                                                                   Walsh Trading Daily Insights


October Lean Hogs traded to a new high for the up move, reaching 61.725. This is just under resistance at 61.80. It settled just below the high at 61.375. China continues to whittle down its frozen state reserves. It will auction 10,000 MT on Friday, September 11. China has auctioned over 540,000 MT of pork from its reserves. This will have to be replaced at some point. If Hogs can best resistance at 61.80, the next challenge will be resistance at 63.325. A pullback from settlement could see support tested at 59.825. Key support is at the 200 DMA (59.23), then 58.25. The cutouts and the Lean Hog Index remain firm after making their lows last month.

The Pork Cutout Index jumped and is at 77.77 as of 9/8/2020. The Lean Hog Index surged and is at 60.53 as of 9/4/2020.

Estimated Slaughter for Wednesday is 484,000 which is above last week’s 474,000 and below last year’s slaughter at 490,000. The weekly slaughter (so far) is estimated at 950,000 (holiday week), lower than last week’s 1,425,000 and last year’s slaughter at 1,469,000.

October Feeder Cattle made a weak attempt to rally just after the open, trading to the high at 140.20 before breaking down and trading to a new low for the down move at 137.25. It bounced and settled at 138.25. The Settlement is below resistance at 138.95 and this should key trade on Thursday. If price can overtake resistance at 138.95 it can make a move to test resistance at 140.775. A failure from settlement could see price test support at 136.75. This could be a strong area as the rising 100 DMA (136.72) is nearby. Support then comes in at 135.60 and the 200 DMA (135.54) (makes this area another pivotal spot, in my opinion).

The Feeder Cattle Index surged and is at 140.91 as of 9/7/2020.

October Live Cattle broke down and erased Tuesday’s gains making the Wednesday low just below its low (104.10) at 103.70. It fought back and rallied to settle at 104.70. It is once again below the 50 DMA (105.42). If price retakes the 50 DMA it faces strong resistance at 106.025 and the 200 DMA (106.32). Support is at 104.20, 103.00 and then 100.275. China is auctioning 2,900 MT of frozen beef and mutton from its reserves on Sept. 10. This is a continuing pattern for China. The beef sold from its reserves will have to be replaced.

Boxed beef cutouts were lower with choice cutouts down 1.87 to 222.95 and select down 0.95 to 207.51. The choice/ select spread narrowed to 15.44 and the load count was 186.

Wednesday’s estimated slaughter is 120,000, which is above last week’s 117,000 and above last year’s 116,000. The weekly estimated slaughter (so far) is 241,000 (holiday week), lower than last week’s 356,000 and lower than last year’s slaughter at 351,000.

The USDA report LM_Ct131 states: Thus far for Wednesday in Nebraska negotiated cash trading and demand have been moderate. Compared to last week live purchases moved 1.00 to 2.00 lower at 101.00 and dressed purchases moved 2.00 to 3.00 lower from 160.00 to 161.00. In Kansas and Western Cornbelt negotiated cash trading has been limited on light demand. In Kansas a few live purchases moved at 101.00. In the Western Cornbelt a few dressed purchases moved from 160.00 to 161.00. However, not enough purchases in either region for a full market trend. Last week in Kansas live purchases moved mostly at 103.00. For the prior week in the Western Cornbelt live and dressed purchases moved from mostly 103.00-104.00 and 162.00-164.00, respectively. So far for Wednesday in the Texas Panhandle negotiated cash trading has been at a standstill. Last week live purchases moved mostly at 102.00-104.00.

Trade Suggestion(s)


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, September 10, 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.

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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163


Fax: 312.256.0109

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