The February Lean Hogs contract made an about-face after failing to take out the Friday high early in the trading session. After failing to overtake the Friday high (69.325) by topping out at 68.975, price broke down and fell below the 100 DMA (68.12) and then collapsed. It fell past support at 66.55 almost going down limit and making a new low in the process. It traded down to 65.40 and a late session recovery took price higher and it settled at 66.15. Settlement is below the 66.55 support level and could lead to continued weakness on the open. A breakdown below the low could see price test the 64.80 – 64.25 support area. Support then comes in at 63.325. A recovery above 66.55 could see price retest the 100 DMA. The Lean Hog index dipped lower and is at 58.35 as of 11/27/2019. The Pork Cutout Index ticked higher and is at 82.17 as of 11/29/2019.
The February Live Cattle opened lower and tested support at the 13 DMA (124.83) making the low just above it at 125.025. It was another quiet trading session in cattle as the market essentially drifted all day and settle at the key level 125.80. The high was on the open at 126.00. Like I said a drifting, quiet session. A breakout above the high could see resistance tested at 126.625. Resistance then comes in at 128.10. A failure from settlement could see support at 124.30 revisited. Cash traded a tiny amount at 187.00 on a dressed basis. Boxed Beef cutouts were higher on moderate to good demand and light to moderate offerings. Choice cutouts rose 0.49 to 232.61 and select was up 2.64 to 212.98. The choice/ select spread narrowed to 19.63 and the load count was 83. Slaughter was 117,000.
January Feeder Cattle opened (142.10) below the 200 DMA (142.34) and crashed, trading to the low of the day at 140.35. This is just below the 140.775 support level. It reversed course and rallied above the 200 DMA, making the session high at 142.60 and then settling just below the 200 DMA at 142.15. It formed a Doji candlestick. A rally above the high could see resistance tested at 143.50. Resistance then comes in at 144.25 and then 145.05. A breakdown from settlement could see support revisited at 140.775. The Feeder Cattle Index was higher and is at 144.97 as of 11/29/2019.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 5th 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.