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Livestock Report

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Walsh Trading Daily Insights


December Lean Hogs started the week on a weak note, making a new low, trading down to 65.30 then was able to garnish some strength making its way higher the rest of the session. It took out the Friday high and traded past resistance at 67.80 to the session high at 67.925. Settlement was nearby at 67.75. The new low was a second test of the rising 21 DMA at 66.22 and it held again. Price was also able to break out and settle above trendline resistance at 66.975. The lower low and the rally past the Friday high formed an outside candlestick and the positive settlement makes it a potentially bullish formation. A break out above the Monday high could see a retest of resistance at 68.75 and resistance then comes in at 69.80. Support is at the trendline (66925), 66.55, the rising 21 DMA and then 64.80.

The Pork Cutout Index dropped and is at 96.99 as of 10/23/2020.

The Lean Hog Index down ticked and is at 78.54 as of 10/22/2020.

Estimated Slaughter for Monday is 492,000 which is above last weeks 477,000 and last years slaughter at 491,000.

January Feeder Cattle continued its consolidation, but formed a potentially bullish outside candlestick formation. The Monday range had its low below Fridays low and high above Fridays high. It also settled in positive territory at 126.775. Settlement was above the key level at 125.90. Trading above the 127.125 high could see price revisit resistance at 127.575 and then 128.875. A failure from settlement could see price retest support at 125.90 and then the October 20 low at 124.25. Taking out the October 20 low could see a swoon down to support at 122.775.

The Feeder Cattle Index declined and is at 133.70 as of 10/23/2020.

December Live Cattle started the week on a down note, making a new low at 102.525 and settling below the 200 DMA (103.64) on the continuous chart at 103.40. There was a rally however, after settlement in the post settlement session taking price past the 200 DMA with the last trade at 103.975. Hopefully this is a precursor to a short-covering rally in cattle. The session high was right at the 104.20 resistance level. There is a lot of overhead resistance in cattle. A rally past the high has resistance at 104.85, the 100 DMA (105.30), and then 106.025. Support is at 103.00, 101.625 and then 100.275.

Boxed beef cutouts were mixed with choice cutouts up 0.34 to 207.83 and select down 2.91 to 188.49. The choice/ select spread widened to 19.34 and the load count was 135.

Mondays estimated slaughter is 118,000, which is even with last week, and above last years 116,000.

The USDA report LM_Ct131 states: Thus far on Monday negotiated cash trading in Nebraska and the Western Cornbelt has been mostly inactive on very light demand. In the Southern Plains negotiated cash trading has been at a standstill. Not enough purchases in any region for a full market trend. Last week in the Southern Plains live purchases traded at 106.00. Last week in Nebraska live purchases traded at 105.00 and dressed purchases from 162.00-166.00. In the Western Cornbelt last week, live purchases traded from 103.00-105.00 and dressed purchases from 163.00-165.00. The report shows live cash trade traded at 103.00.

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 29, 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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