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Walsh Trading Daily Insights


December Lean Hogs consolidated within Fridays trading range on Monday. Since becoming the lead contract, the December Hogs have been trading between 64.85 and 61.25. Cash has been strong (cutout prices and cash hog prices) as strong demand from both domestic and foreign buyers has led to rising prices. I think the Hogs and Pigs report is creating some confusion as it is showing the backlog in market ready hogs isnt declining as the industry would like, but producers believe the numbers are declining. The German African swine fever case load continues to grow, but it has been found only in wild boar and it hasnt affected farms. Still, the danger is there and Asian customers have moved away from German pork products so in my opinion demand for US pork should remain strong going forward. Support is at 63.325, 61.80, 59.825, 58.25 and then 57.025. Resistance is at 64.80, 66.55 and then 67.80. (See trade idea).

The Pork Cutout Index increased and is at 90.13 as of 9/25/2020. The Lean Hog Index increased and is at 74.53 as of 9/24/2020.

Estimated Slaughter for Monday is 489,000 which is above last weeks 478,000 and last years slaughter at 485,000.

November Feeder Cattle gap opened lower and tested support at 138.95, making the low just above it at 139.05. Feeders worked its way higher and reached a high of 141.20, closing the gap and settling nearby at 141.10. It settled above the key level at 140.775 and this should key trade for Tuesday in my opinion. A rally above settlement could see price test resistance at 142.40. A failure from 140.775 could see price revisit support at 138.95. Resistance is at 142.40, the 50 DMA at 142.95 and then 143.50. There is resistance at the gap from 144.35 to 144.875. Resistance then comes in at 145.05 and 146.20. Support is at 140.775 and then 138.95.

The Feeder Cattle Index hasnt updated as I write my article.

December Live Cattle also gap opened lower as the Cattle on Feed report from Friday afternoon had traders bearish at the start of Mondays trade. Once again, the selling subsided and futures rallied to the high at 111.925 and it settled at 111.65. December cattle has been consolidating in a range since becoming lead contract between 112.575 high and 109.80 low. Thats right at resistance at 112.35 and 109.60 support. A breakout above resistance could see price test 113.90 and then 114.65. A breakdown below 109.60 could see support tested at 108.65 and then 107.30.

Boxed beef cutouts were lower with choice cutouts down 1.62 to 217.72 and select down 0.56 to 206.42. The choice/ select spread narrowed to 11.30 and the load count was 148.

Mondays estimated slaughter is 118,000, which is lower than last weeks 120,000 and above last years 116,000.

The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. Last week in all major feeding regions live purchases moved at 105.00. In Nebraska and Western Cornbelt dressed purchases moved at 165.00.

Trade Suggestion(s)

Hogs Buy the June 100 call and sell the June 110/100 put spread for negative 860.


Max risk is $560.00 per contract plus commissions and fees.

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, October 1, 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


Fax: 312.256.0109

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

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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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