The February Lean Hogs contract spent its ninth day in a row within the December 13th trading range. It opened lower, made the high of the day at 71.025 and then made its way to the 69.90 support level making the low at 69.825. It recovered and settled at 70.575. Price seems to like being in this trading range as it waits for more information on trade with China. A rally above settlement could see price retest the December 13th high at 71.55. If price can break out above 71.55 – 71.85, a test of resistance at 72.80 is possible. The February high (the day it became lead contract) is next at 73.40. A failure from settlement could see price test the 69.90 support level. A break down below the 69.90 support level could see price test support at 68.75. The Lean Hog index hasn’t updated and is at 59.09 as of 12/23/2019. The Pork Cutout Index declined and is at 76.54 as of 12/26/2019.
The February Live Cattle traded above Thursday’s high to 127.225. It settled at 126.70. A quiet holiday trading session. Settlement was just above resistance at 126.625. If price can hold above 126.625, a test of resistance at 128.10 is possible. A failure from settlement could see price test support at 125.80 and then the December 23rd low at 125.225. Cash has traded at 195.00 on a dressed basis in Nebraska and Iowa. It has been quiet in other regions. Boxed Beef cutouts were lower on light demand and moderate offerings. Choice cutouts fell 1.19 to 208.96 and select was down 0.68 to 204.57. The choice/ select spread narrowed to 4.39 and the load count was 113. Slaughter was estimated to be 122,000. Saturday’s estimate is 83,000. The total for the holiday week is estimated at 468,000. Last year at this time slaughter was 442,000.
January Feeder Cattle traded above yesterday’s high making the high of the day at 145.825. It settled at 145.55. It also traded in a ho-hum holiday trading session. If price can hold settlement on Monday, a recovery to resistance at 146.20 is possible. This is just below the December 13th high at 146.65. Aggressive buying could see price push past the high and make its way toward resistance at 147.30. A failure from support at 145.05 could see price test support at 144.25 and then revisit 143.50. The Feeder Cattle Index fell and is at 144.61 as of 12/26/2019.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, but due to the holiday season our next webinar will be on January 9th 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.
**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,
www.walshtrading.com
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.