April Lean Hogs had a strong recovery today, bouncing back from Monday’s test of the February 20 low. It came within .425 of going up limit reaching 56.475 before pulling back at the close and settling at 55.725. Hogs are in consolidation mode again, trading between 56.60 and 52.25. A breakout above 56.60 could lead to a test of the 100 DMA now at 60.473. A break down below 52.25 could see price test support at 49.925. The US has been producing tremendous amounts of pork in 2019, much more than analysts had anticipated and have led to declines in the pork cutout index and the lean hog index as the supply of pork has overwhelmed the demand for pork. Tariffs have put a damper on demand for US pork, so the sooner trade normalizes the better. Even the African swine fever has failed to generate expected demand. There is hope as the president has delayed raising tariffs on China as progress is being made with trade negotiations between the two countries. The sooner an agreement can be made that is satisfactory to all parties, the better.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, February 28th 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.