The February Lean Hogs contract opened lower, traded to the low at 68.60 and then rallied past resistance at 69.90 to the high at 70.20. This is just below the declining 13 DMA now at 79.34. It consolidated below the high, then broke down and settled at 69.025. Hogs are trying to climb into the upper end of Friday’s range but so far it has failed to hold onto rallies. A failure from settlement could see price revisit support at 67.80 and the rising 50 DMA now at 67.83. If price can hold settlement, a re-test of resistance at 69.90 and the declining 13 DMA is likely. The Lean Hog index down ticked and is at 59.16 as of 01/06/2019. The Pork Cutout Index declined and is at 73.81 as of 01/07/2019.
The February Live Cattle consolidated within Tuesday’s trading range forming a second inside candle as Tuesday’s range was within the Monday range. It settled at 126.35, which is just below resistance at 126.626 and above support at 125.80. Price still consolidating within the 127.9- – 123.30 trading range. It is in the upper end of the range and needs to take out the high and then blow past resistance at 128.10 to get energy back in the market. Otherwise, it will likely stay within the trading range. A break out above 128.10 could see price approach resistance at the March 1, 2019 high at 130.45. A failure from settlement could see price test support at 125.80 and then 124.30. Cash trade was at a standstill in Kansas and Nebraska. The Western Cornbelt saw limited trading at 125.00 on a live basis. Boxed Beef cutouts were lower on light to moderate demand and moderate to heavy offerings. Choice cutouts dipped 0.06 to 209.50 and select was down 0.29 to 206.53. The choice/ select spread widened to 2.97 and the load count was 153. Slaughter was estimated to be 122,000.
March Feeder Cattle also was the strongest of the bunch as it traded back to Monday’s high at 146.925, making Wednesday’s high just below it at 146.90. It settled nearby at 146.525. If price can breakout above Monday’s high, a at test of resistance at 147.30 is possible. If the bears panic a run to 148.40 is possible. If settlement fails, a re-test of support at 145.05 and then 144.25 is probable. A failure from here could send price down to support at 143.50. The Feeder Cattle Index hasn’t updated at the time of my article and is at 145.98 as of 01/06/2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, and 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.