June Lean Hogs gap opened lower then closed the gap and then plummeted to go down limit as the wild ride continues. Limit up – limit down – expanded limits have been the rule, rather than the exception in the Hog markets lately. You have to be quick on the trigger and disciplined in your trading approach with these gyrations in the market. Anticipation then disappointment then anticipation then disappointment have been the driving force in in the price discovery process in Hogs. The African swine fever and tariffs have been the focus of the angst of traders’ expectations. It reared its ugly head in August of 2018 in China and has proven to be difficult to contain. The African swine fever continues its spread in China and has expanded its destruction throughout Asia. There isn’t a cure and probably won’t be for years. China needs to import pork and has been increasing its imports as local spot prices have been rising in 2019. The US hasn’t been to the party except for a huge purchase in March of approximately 24,000 tons. Traders’ anticipation of a trade agreement and the removal of tariffs have taken price to new highs and tests of strong resistance levels that turn price back down with a vengeance when the realization sets in that there hasn’t been a trade agreement and tariffs are still in place. That, to me is what is going on now. Price rebounded hard on strong support when it appeared the US and China was close to an agreement. The ensuing rally took price to a new high at 99.825. This is just below strong resistance at 100.075. The lack of positive trade news stifled price. We saw consolidation yesterday and then a route today. Price is near a confluence of support between 95.30 and 94.05. Tuesday’s low and settlement was 95.15. Limits have been expanded to 4.5 handles. Will the bull be fed on Wednesday?
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, April 11 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.