Dennis Smith from Archer Financial Services, June 30th 2020

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MORNING LIVESTOCK REPORT

By Dennis Smith

 

Follow me on Twitter @denniscattle

 

Tuesday June 30, 2020

 

CORN AND SOYBEANS: The June 30thacreage report will be issued today at 11:00 Chicago time. Prices are moving higher into the seasonal high timing. We’re selling the board for both spec and hedge accounts. Consider the following ideas with risk parameters in place. The weather looks negative to prices. Both corn and soybeans are rated higher than 70% good to excellent. There is rain in the forecast, there’s plenty of subsoil moisture and currently there’s no extreme heat in the forecast.

 

  1. Sell Dec corn at 338 or higher. Buy stop at 349 ¾ stop.
  2. Sell Nov soybeans at 871. Buy stop at 892 stop.
  3. Sell Dec soybean oil at 2840 or higher, buy stop at 2955 stop.
  4. Move the buy stop on the current short soybean oil down to breakeven.

 

LEAN HOGS:

Last day of the month and last day of the quarter. Lean hog open interest down 312 cars yesterday. Can’t get much meaning out of that. The cutout failed to hold the gains from the noon quote. If Aug works upward and into the upper end of the gap left from Friday we will pursue buying some puts. Numbers, according to the data will remain large all summer and right into the fall runs. There will not be much of a let up, perhaps a couple of weeks of tight runs. In effect, the packers still have a labor problem on their hands and sadly it won’t be solved by contraction in the industry. We thought it would. Despite record export business, it appears prices will not recover.

 

LIVE CATTLE:

There was some decent volume of cash trade reported late yesterday by the USDA. IA was the volume leader selling 800 head in the live at 95 to 97 cents and 2100 in the meat at $152-$153. TX sold 800 at 91 to 92 cents, KS only 100 head at $153 in the dressed meat and NE 200 in the live market at 95 cents and 600 in the dressed market from 152-153. So, the lower trend in cash appears to be developing, again. LC open interest was up 294 with FC OI up 346. Again, no conclusions from this information. June goes off at noon today and trades without limits. I’m looking at spread ideas today and fundamentally I like being long Oct/short Feb. I can also build a fundamental case for being long Oct and short Aug. Stay tuned for a specific trade idea in tonight’s wire. Generally speaking, I’m looking for lower cash and lower cutout during July and into Aug to pressure the front end of both LC and FC. We are hedged accordingly.

 

The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. This report is a solicitation.

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