April Lean Hogs stalled today as it consolidated within Tuesday’s trading range. It couldn’t hold its rally above a confluence of resistance levels on Tuesday, settling below the resistance band (60.41 – 60.98) at 60.325. Today’s trade saw an attempt to trade above the lower resistance level that failed and saw the market drift lower to settle at 59.775. This is just below the 59.825 key level, which could be the key for trading on Thursday. A continuation lower could see price close the gap (59.375 – 59.45) created from Monday and Tuesday’s rally and then further weakness could see price move towards support at 58.25. If 59.825 holds a retest of the resistance band is likely. Hogs need a catalyst to help drive price higher as the pork cutout index (65.28 as of 2/12/2019) and the Lean Hog index (55.91 as of 2/11-2019) continues to weaken. The market needs to receive positive demand news as occasional encouraging trade talk with China has not been enough to get Hogs moving higher. China has disease problems with the African swine fever which has afflicted nearly every province and has traders anticipating a surge in pork imports. It hasn’t proven to be the case…yet, and information flow out of China is practically non-existent. It is hoped the ongoing trade talks will result in aggressive Chinese buying of U.S. pork and until positive results emerge from the trade negotiations, Hogs will surge, sputter and pull back, in my opinion.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, February 14th 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.