The April Lean Hogs contract continued its downward spiral after upside breakout failure. It opened lower from Tuesday’s settlement, made an early run higher to test resistance at 64.80 making the high at 65.05 and then a breakdown to support. Hogs traded through support at 63.325 to the low at 63.275. It bounced and settled at 63.775. Settlement was below the 8 DMA at 63.90 and above support at 63.325. If Hogs can hold the 8 DMA, a re-test of resistance and then the Tuesday high is possible. The declining 13 DMA now at 65.35 is next. Resistance then comes in at 66.55. If support at 63.325 fails price could re-visit support at 61.80 and then the 2/3/2020 low at 61.00. The Lean Hog index continued its decline and is at 57.93 as of 02/10/2020. The Pork Cutout Index once again collapsed and is at 64.80 as of 02/11/2020.
The April Live Cattle opened lower and then traded to a new low for the down move at 116.65. This is just above support at 116.55. The market reversed course and rallied. It made its high at the end of the session at 118.05. It settled at 117.85. Settlement was right at support at 117.80. A failure from settlement could see price re-test support at 116.55. Support then comes in at 114.65. If settlement holds, price can re-visit resistance at 119.15. Short-term moving averages are declining with the 8 DMA at 119.27 and the 13 DMA nearby at 119.70 also providing resistance. Resistance then comes in at 120.70. Cash trade was active with 119.00 trading in Texas, Kansas and Nebraska on a live basis. Boxed Beef cutouts were mixed on light to moderate demand and moderate offerings. Choice cutouts decreased 1.52 to 206.31 and select was up 0.77 to 205.30. The choice/ select spread narrowed to 1.01 and the load count was 124. Slaughter was estimated to be 120,000.
March Feeder Cattle opened higher and traded down to support at 134.25, making the low just below it at 134.175. It was able to recover and it rallied to the session high at 135.525. The high is just below resistance at 135.60. After making the high price faded, trading down to 134.65 and then settling at 135.05. Settlement was below resistance at 135.60 and the declining short-term moving averages (8 DMA at 135.87 and the 13 DMA at 135.71). A breakdown below settlement could see price re-test support at 134.25 and then 133.50. If price can power past the 8 DMA, a re-test of resistance at 136.75 is possible. Resistance then comes in at 138.95. The Feeder Cattle Index increased and is at 140.67 as of 2/10/2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays and our next webinar will be on Thursday, February 13th 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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Senior Market Strategist
Walsh Trading, Inc.
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.