Livestock Update

John Walsh General Commentary, Livestock Leave a Comment

Commentary:

LIVE

The meat market has a lot to consider at present, as all markets do. The Covid has taken its toll on demand and is a consideration. The cattle weights remain high and this is an issue. The March demand story that had consumers buying to stock the freezer to get through a couple weeks has turned into a consumer that is stocked up. The govt now has extended the lock down which potentially pushes demand out. The April market needs to show demand. The slaughter for the week was 120 t, compared to 116 t last week, and 115 t last year. The trend is not helping. Dressed weights 832 compare to 805 a year ago, overall production is approx 11% higher than a year ago. These will be difficult facts to overcome. To be considered is the fact the market has fallen considerably. In addition, the tech action showed a move on the board basis April on 3/25 to 110. This was a 14 day high. Currently the live board sits at the 14,21 day MA approx 102. This could potentially be setting up a sideways trade waiting for friendly news. In addition, the futures remain a discount to cash.  Expect a choppy trade.

HOGS

The hogs have fallen considerably since the beginning of the year. The closing of restaurants, especially for the next 30 days has the market spooked. The real concern of pork backing up in the country is felt in the price. This is a situation that may take some time to sort through. The difficult aspect is that the meat market in general, but certainly pork, was expanding due to thoughts that China would be a major importer. There pork issues expanded hope, only to fall short. At present the slaughter is 491 t wk, this compares to 471 t year ago. The trend here, as in the beef market, unfortunately is moving in the wrong direction. Looking at the technicals offers little optimism. The market has fallen quickly below the 14,21, MA. The nearby would need a close at present at 59.84 to reach the 14 MA. The current fundamentals will impact future production. This is what will need to happen to clear some of the overproduction. We are not there yet in my opinion although this market will get volatile. Exercise caution. Move away from betting on the come, lock in profit immediately if it presents itself.

Trade Suggestion(s)
NA today
Risk/Reward
Futures-
Options –

BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
800-993-5449
312-208-8836
jwalsh@walshtrading.com
www.walshtrading.com

Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.​

Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.​

All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Leave a Reply

Your email address will not be published. Required fields are marked *