The February Lean Hogs contract gap has traded within Friday’s break out candle for the past two sessions. Friday’s high was at 71.55, right in the middle of the 71.325 – 71.85 resistance zone. Friday’s low was 68.70, right at the 68.75 support level. Tuesday’s high is 71.00 and Monday’s low was 69.075. Tuesday’s settlement (69.85) is just below the key level at 69.90. A break down below the 68.70 low could see price test support at 67.80. Support then comes in at 66.55. If price can hold settlement and rally above 69.90, a re-test of the Friday high is possible. Resistance then comes in at 72.80. The Lean Hog index down ticked and is at 59.81 as of 12/13/2019. The Pork Cutout Index fell and is at 81.90 as of 12/16/2019.
The February Live Cattle hasn’t been able rally past Friday’s high the past two trading sessions, consolidating within its range. Tuesday’s low pushed past support at 126.625, making the low at 126.25 and settling below it at 126.30. a failure from here could see price test support at 125.80 and then 124.30. If price can recover and trade above 126.625 a test of resistance at 128.10 is possible. Cash was quiet on Tuesday. Boxed Beef cutouts collapsed on light demand and moderate offerings. Choice cutouts fell 4.27 to 212.81 and select was down 2.04 to 203.47. The choice/ select spread narrowed to 9.34 and the load count was 152. Slaughter was 123,000.
January Feeder Cattle followed Hogs and Cattle, also trading within Friday’s big trading range. Tuesday’s trade tested resistance at 146.20, making the high just above it at 146.40. It then fell back and tested support at 145.05, making the low at 144.975. It settled just above it at 145.15. A recovery above settlement could see Tuesday’s high revisited, resistance then comes in at 147.30 and then the high for the up move at 147.775. A break down from the low could see price test support at 144.25 and then 143.50. The Feeder Cattle Index was higher and is at 145.10 as of 12/16/2019.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 19th 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.