The February Lean Hogs contract consolidated within Monday’s trading range. It settled at 71.425. This is right at the low end of the 71.325 – 71.85 resistance area. It was a nothing end to an interesting trading year. Tariff wars are at least temporarily over with and the US – Chinese phase 1 signing should take place test on January 15th of the brand new 2020. I hope with the signing of the pact, the Chinese reduces pork tariffs and starts buying US pork in sizeable amounts. A break out above 7185 could lead to a test of resistance at 72.80. The February high (the day it became lead contract) is next at 73.40. Trading below 71.325 could see price test support at 69.90. The Lean Hog index down-ticked and is at 58.17 as of 12/27/2019. The Pork Cutout Index declined and is at 75.79 as of 12/30/2019.
The February Live Cattle dipped to the 125.80 support level. It made the low at 125.70 and settled at 125.925. The range was tight with the high at 126.70, just above the key level at 126.625. If price can hold above 126.625, a test of resistance at 128.10 is possible. A failure from settlement could see price test support at 125.80 and then the December 23rd low at 125.225. Cash saw some light trading at 195.00 on a dressed basis. Boxed Beef cutouts were lower on light to moderate demand and heavy offerings. Choice cutouts declined 0.24 to 209.42 and select was down 3.29 to 202.12. The choice/ select spread widened to 7.30 and the load count was 228. Slaughter was estimated to be 100,000.
March Feeder Cattle tested support at 143.50, making the low just above it at 143.675. It made the high at 144.80. It settled at 144.225. If price can hold settlement a test of resistance at 145.05 is possible. If it can take out resistance at 145.05, a recovery to resistance at 146.20 is possible. Aggressive buying could see price make its way toward resistance at 147.30. A failure from settlement could see price test support at 142.40 and the nearby 200 DMA at 142.19. The Feeder Cattle Index rose and is at 141.81 as of 12/30/2019.
Happy New Year. I hope you have a successful year in 2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, but due to the holiday season our next webinar will be on January 9th 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.