July Lean Hogs is now the lead contract as its volume has overtaken the June volume. The July contract tested resistance at 93.50 on the continuous chart making the high of the day at 93.375. Resistance was firm and price collapsed and trade down to the session low at 91.025. It settled near the low at 91.375. Support is at the rising 50 DMA at 90.876 and then 90.45. A break down below support could see price test the 13 DMA at 89.68 and the move toward the 88.325 support level. If the 50 DMA holds, price could test resistance at 92.375 and may move toward the 93.50 resistance level. The Lean Hog Index is firm at 84.59 as of May 17th and the pork cutout index dipped to 86.77 as of May 20th. China said to be ready for a long trade war and Mexico removed tariffs on some goods after the president exempted them from tariffs on aluminum and steel but it doesn’t look like pork tariffs are being removed is put pressure on Hogs.
August Live Cattle is now the lead contract and it broke down below the 108.65 support level and drifted lower to the session low at 107.725. It settled at 108.275. A rally past 108.65 could see price move toward resistance at 110.80. A failure from settlement could see price test support at 107.30 and then 106.025. The cash market quiet and boxed beef cutouts fell with choice cutouts down 1.87 to 219.58 and select down 1.45 to 206.58 on light to moderate demand and offerings. The choice/ select spread narrowed to 13.00 and the load count was 138. Slaughter was 120,000.
August Feeder Cattle broke down hard. It traded past support at 142.40 to the session low at 142.025. It rebounded and settled at 143.00. Settlement is just below resistance at 143.50. If price can recover and trade past 143.50 a retest of resistance at 144.20 and 145.05 is possible. A breakdown below the142.40 support level could see price test the 140.775 support level. The Feeder Cattle Index is at132.25 as of May 20th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 23rd 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.