The July Lean Hogs contract continues to spin its wheels in mud on Tuesday as another complete reversal in price action took place. The mud splattered all over Mondays rally as it covered up all the gains made from surge. The latest breakdown inched price past yesterday’s low (83.30) to a new low for the down move at 83.20. It briefly went limit down before stabilizing and settling at 84.375. Wow! That’s three limit type moves in three days. It was down limit on Friday, up more than limit on expanded limits on Monday and another limit down move today. It’s like watching episodes of the tv series Soap… confused about what’s going on well watch the next show… The best thing you can say about the tree day trade is the 83.325 support level has been holding. Tested, tested and retested but holding…. If it fails look for price to test the 80.45 to 79 .80 support area. If price rallies from settlement a retest of resistance at 85.375 and the declining 13 DMA now at 86.369 is possible. The Lean Hog Index declined and is at 79.95 as of June 7th and the pork cutout index declined to 84.21 as of June 10th.
August Live Cattle was the most stable product in the livestock quadrant eking out a new high at 107.075 for the fledging up move. It stopped right at the declining 21 DMA now at 107.033. Settlement was just below it at 106.825. If price can rally past the 21 DMA and nearby technical resistance at 107.30 a test of resistance at 108.65 is possible. It settled above resistance at 106.025 and follow through buying could see price test resistance up at 107.30 and then 108.65. A failure from the high could see price pullback and test 106.025 and then the104.85 – 104.20 support area. The cash market was quiet. Boxed beef cutouts were mixed as choice cutouts were up 0.73 to 222.39 and select was down 0.54 to 208.25 on light to moderate demand and offerings. The choice/ select spread widened to 14.14 and the load count was 110. Slaughter was 122,000.
August Feeder Cattle failed at the declining 21 DMA (140.636). It made the high just above it at 140.90 and then took a swan dive and traded to the session low at 137.675. It settled at 138.125. It formed an inside candlestick. Corn prices rallied after the USDA report and fears of higher feed costs seemed to permeate the market taking feeder prices lower. If price breaks down below the 137.675 Tuesday low, a test of support at 136.75 is possible. Support then comes in at 135.60 and 134.25. Another reversal in fortune could see price revisit the 21 DMA for the third day in a row. Pushing past the 21 DMA could take price up to resistance at 142.40. The Feeder Cattle Index moved higher to 132.91 as of June 10th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, June 13th 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.* *
Senior Market Strategist
Walsh Trading, Inc.
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.