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Livestock Report


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Walsh Trading Daily Insights

Commentary

August Lean Hogs consolidated near the lows. It was able to eat into by a few ticks the above gap but just drifted for the most part. Back months faired better as they were up over a handle on the day. The gap from Thursdays low at 50.60 to Fridays high at 48.95 narrowed slightly with the session high at 49.375. This is a tick above resistance at 49.35. Settlement was nearby at 49.025. Hogs are in a downtrend in my opinion and the gap could be strong resistance. Support on Wednesday is at 47.775, 46.30 and then 43.05. Resistance is at 49.35, 50.475 and then 51.80. The Pork Cutout Index ticked higher and is at 65.28 as of June 29, 2020. The Lean Hog Index was unchanged and is at 45.23 as of June 26, 2020. Estimated Slaughter for Tuesday is at 469,000. This is above last weeks slaughter of 457,000 and below last years slaughter at 480,000.

August Feeder Cattle surged early in the trading session reaching the high at 135.675. This is just below resistance at the 200 DMA at 135.78. It failed miserably as it fell apart and traded to the low of the day at 132.275. I believe the breakdown was the result of the bullish corn acreage report that led to a rally in corn futures, in my opinion. It settled near the low at 132.85. The battle continues with settlement in the middle of its 138.80 128.325 trading range. Wednesday has support at 132.075, 131.10 and then 129.65. Resistance is at 134.25, 135.60 and then 136.75. The Feeder Cattle Index has declined the past two reporting periods and was at 129.68 as of 6/26/2020 and then 129.42 as of 6/29/2020.

August Live Cattle inched past the Tuesday high early in the session reaching 98.15 but with the high and resistance at 98.125 it was too much for the market to sustain the rally. Plus, it broke through the 100 DMA at 97.15 and it acted like a magnet pulling price back towards it. The bullish corn report didnt help. You also had June surprise and break down hard to settle at 91.65. The weakness in June at the end of its trading life makes August rallies suspect in my opinion. The consolidation continues. Support is at 96.10, 94.30, the rising 50 DMA at 94.19, trendline support at 93.425 and then 92.15. Resistance is at the declining 100 DMA on the continuous chart at 97.15, 98.125, 99.375 and then 100.275. Boxed beef cutouts resumed their trek lower on Tuesday with choice cutouts down 1.39 to 206.97 and select down 0.81 to 199.90. The choice/ select spread narrowed to 7.07 and the load count was 174. Tuesdays estimated slaughter is 121,000, above last weeks 120,000 and below last years slaughter of 123,000. This is a shortened kill week due to the July 4th holiday on Saturday. The USDA report LM_Ct131 didnt update properly so I do not have todays reported trades.

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.

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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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