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Livestock Report


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Walsh Trading Daily Insights

Commentary

August Lean Hogs saw some follow through to the downside after Mondays weak close. It traded down to 48.225 and settled at 48.875. Hogs are in a trading range with the low at 47.525 and the high at 50.35. Support on Wednesday is at 46.30 and then 43.05. Resistance is at 49.35, 50.475 and then 51.80. The Pork Cutout Index decreased and is at 64.58 as of July 6, 2020. The Lean Hog Index increased and is at 45.66 as of July 2, 2020. Estimated Slaughter for Tuesday is at 469,000. This is even with last weeks slaughter but below last years slaughter at 477,000.

August Feeder Cattle drifted lower, moving back below the 200 DMA (135.73) on the continuous chart making the low at 134.85 and settling nearby at 134.925. It is still trading in the 138.80 128.325 trading range and the failure to stay above the 200 DMA is not a good sign for the market, in my opinion. It is still close to the 200 DMA so a reversal on Wednesday could get price above the strong resistance level. Wednesday has support at 134.25, 133.50, the 50 DMA at 132.55 and then 132.075. Resistance is at 135.60, the 200 DMA, 136.75, 138.95 and then 140.775. The Feeder Cattle Index jumped and is at 130.13 as of 7/6/2020.

August Live Cattle sagged in a quiet trading session. Its range was tight (100.375 99.60) and settlement was at 100.00, just 0.10 below yesterdays settlement. October will be the lead contract soon as volume is close to the August contract and should overtake it in a few days. Support for August is at the 99.35, 98.125 and then 97.075. Resistance is at 100.275, 101.625 and then 103.00. Boxed beef cutouts dipped on Tuesday with choice cutouts down 0.16 to 205.30 and select down 0.13 to 196.84. The choice/ select spread narrowed to 8.46 and the load count was 124. Tuesdays estimated slaughter is 119,000, below last weeks 121,000 and below last years slaughter of 120,000. The USDA report LM_Ct131 states: Thus far Tuesday, trade was slow on light demand in most feeding regions. A few early live purchases in the Texas Panhandle were reported at 95.00. In Kansas few were reported from 94.00- 95.00. In Nebraska a few dressed purchases traded mostly from 157.00-160.00. A few purchases were reported in the Western Cornbelt at 100.00 and 160.00 respectively. However not enough purchases in any feeding region for an adequate market test. The latest established market in any region was on Monday with dressed purchases in the Western Cornbelt at 160.00. The latest established live market in the Western Cornbelt was last week, with live purchases from 96.00- 97.00. The latest established market in the Texas Panhandle was last week with live purchases from 93.00-95.00. In Kansas last week, live purchases traded mostly at 95.00. Last week in Nebraska live purchases traded from 95.00-96.00 with dressed purchases from 154.00-155.00. Last week in Colorado, live purchases traded mostly at 96.00.

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 9, 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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**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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