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Livestock Report


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Walsh Trading Daily Insights

Commentary

August Lean Hogs gap opened lower and crashed, going limit down making the low at 47.575 and settling at 48.125 down 3.200. The market was expecting fireworks from the Hogs and Pigs report and it didnt disappoint. The Report showed All Hogs and Pigs at 105.2% of last Year, with expectations coming in at an average at 103.7%. Hogs kept for Breeding at 98.7% vs average estimates at 98.2%. Hogs kept for Market at 105.8% vs average estimates of 104.2%. The March-May pig crop was 101.4% vs average estimates of 98.7%. (See list below for more of the report.) It seems producers didnt slam on the brakes as expected which will leave the market with a large supply to work through, in my opinion. The limit move tested support at 47.825 with the low below it but settlement above it. A continuation lower has support on Monday at 46.30 and then 43.05. Resistance is at 49.35, 50.475 and then 51.80. The Pork Cutout Index was unchanged and is at 64.93 as of June 25, 2020. The Lean Hog Index made a new low since the May 13 peak at 68.87 and is at 44.87 as of June 24, 2020. Estimated Slaughter for Friday is at 472,000. This is above last weeks slaughter of 457,000 and above last years slaughter at 453,000. With estimated Saturday slaughter at 323,000 vs. last weeks 290,000 and last years 60,000 slaughtered, levels are now consistently higher which is keeping cutout and cash prices suppressed but is starting to eliminate the slaughter deficit with last year, in my opinion. Slaughter for the week is estimated at 2,641,000, higher than last weeks 2,587,000 and well above last years 2,386,000. Total slaughter for the year so far is estimated at 62,294,000 vs 62,468,000 for the same period last year.

Hogs and Pigs Report:

Hogs and Pigs Report

August Feeder Cattle continued its consolidation within Tuesdays trading range. Tuesdays range was 135.375 high to 131.025 low. Volume remains light and the trading ranges are tight since Tuesday. Fridays settlement was 132.60. Monday has support at 132.075, 131.10 and then 129.65. Resistance is at 133.50, 134.25, 135.60 and then 136.75. The Feeder Cattle Index increased and is at 129.82 as of 6/24/2020.

August Live Cattle is also consolidating within its Tuesday trading range. The Tuesday high was 98.125 and its low was 94.75. Price has drifted into the lower end of the Tuesday range with the low at 95.225 and settlement at 96.025. Volume is also low and the price ranges have tightened considerably the past two sessions. Support is at 94.30, the rising 50 DMA at 93.99, trendline support at 93.15 and then 92.15. Resistance is at the declining 100 DMA on the continuous chart at 97.61, 98.125, 99.375 and then 100.275. Boxed beef cutouts declined with choice cutouts down 1.09 to 207.17 and select decreased 1.08 to 198.85. The choice/ select spread narrowed to 8.32 and the load count was 135. Fridays estimated slaughter is 119,000, even with last weeks slaughter, and below last years 121,000. The Saturday estimated slaughter is at 82,000, much higher than last weeks and last years 59,000. This is a positive step to eliminating the deficit in slaughter numbers as it puts slaughter for this week higher than last years slaughter. This weeks slaughter is estimated at 680,000, higher than last weeks 656,000 and last years 670,000. The USDA report LM_Ct131 states: So far for Friday in the Southern Plains negotiated cash trading has been at a standstill. The last reported market in the Southern Plains was on Thursday. In the Texas Panhandle live trades moved mostly from 93.00 to 95.00. In Kanas live trades moved at 97.00. Thus far for Friday in Nebraska and Western Cornbelt negotiated cash trading has been inactive with very light demand. Not enough trades for a market trend. In Nebraska the last reported live trade market was Thursday with trades at 95.00 and the last reported dressed market was on Wednesday with trades moved from 155.00 to 156.00. In the Western Cornbelt the last reported live trade market was on Tuesday with trades at 98.00. The last reported dressed trade market was on Wednesday with trades from 153.00 to 156.00. The only trade price showing on the report for Friday is at 95.00 on a live basis. Nothing showing for dressed so far. Week price range Live 93.00 to 100.50 and dressed from 152.00 to 156.00.

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, July 2, 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.

Sign Up Now

**Call me for a free consultation for a marketing plan regarding your livestock needs.**

Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

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About the author


Ben DiCostanzo
Senior Market Strategist
Walsh Trading

I began my career in the Securities industry working as a runner on the floor of the New York Stock Exchange while I attended Pace University. I then started working for Salomon Brothers in their Government Bond Trading arena. After graduating from Pace University with a degree in Accounting, I transferred to Chicago and became a member of the Chicago Mercantile Exchange utilizing my experience to execute trades and manage risk for institutional clients as a broker for Salomon Brothers on the trading floor. I then embarked to trade for my own account in the stock indices pits as a local before moving off the floor to aid and assist individual clients in their trading endeavors. I now work at Walsh Trading holding a series 3 broker’s license whose duties include being the firm’s Chief Market technician.

I understand that every client's needs are different, and I pride myself in tailoring my service to each client's unique circumstances and needs. Individual client experience, risk tolerance, and capital all play a role in how I approach the markets. I am involved in all markets using technical analysis to find opportunities. My approach is driven by the principles of capital preservation.

My trading philosophy is that if you can recognize and manage the risk, you have a better chance to be successful in trading. I advise clients to always use stops as money management in my opinion is the most important ingredient in trading commodities.

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