The April Lean Hogs contract continued its attack on the 200 DMA on the continuous chart. It also continued to fail against it. The 200 DMA is declining and is at 74.51. April Hogs traded from 74.90 high to 73.275 low and it settled at 74.525. It did settle above the key level at 74.25. Hogs are trying to anticipate aggressive Chines purchases of pork, Cash prices are still lagging. The Lean Hog Index trails futures in both February and April by wide margins. The 200 DMA is strong resistance. The US and Chinese have come to terms on the phase 1 agreement…will it lead to even bigger purchases of US pork by the Chinese than last year? Will the US overproduce like last year in anticipation of “huuge” Chinese purchases? 2020 will be interesting… A break out above the Wednesday high could see price test resistance at 75.60. Resistance then comes in at 76.175. A failure below 74.25 could see price test support at 72.80. Support then comes in at 71.85. The Lean Hog index ticked higher and is at 60.18 as of 01/20/2019. The Pork Cutout Index increased and is at 76.19 as of 01/21/2019.
The April Live Cattle contract continued to navigate its narrow trading range. Wednesday’s range was 127.275 high and 126.475 low with settlement at 126.775. If price can hold settlement, a test of resistance at 128.10 is possible. 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 for Wednesday occurred at 124.00 on the fedcattleexchange.com auction and in the Southern Plains on a live basis. Demand has been moderate. It traded at 198.00 on a limited basis in Nebraska and the Western Cornbelt. Boxed Beef cutouts were mixed on light to moderate demand and offerings. Choice cutouts increased 0.45 to 214.96 and select was down 1.45 to 212.02. The choice/ select spread widened to 2.94 and the load count was 157. Slaughter was estimated to be 123,000. Slaughter for the week is expected to be above 630,000.
March Feeder broke down into the lower end of its 147.75 – 141.325 trading range, trading below the 50 DMA (144.07) to the session low at 142.95. The high was at the opening price of 144.65 and settlement was at 143.05. The low is just above the 142.40 support level. A breakdown below 142.40 could see the 200 DMA tested at 141.83. The 141.325 trading range low is next. If settlement holds a re-test of 50 DMA is possible. Resistance then comes in at 145.05 and then 146.20. The Feeder Cattle Index down ticked and is at 145.46 as of 01/20/2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, but with the holiday on Monday, our next webinar will be on Friday January 24th at 2:00 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.**
Senior Market Strategist
Walsh Trading, Inc.
Fax: 312.256.0109, email@example.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.
Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.