The August Lean Hogs contract made a new low for the down move, trading down to 75.50 during the first 5 minutes of the trading session… Huh…. In a mesmerizing turn around Hogs bulled its way higher and by mid-morning was limit up …yup… limit up for the day… It got there and stayed firm for the rest of the session… wow… Settlement was 79.075 … expanded limits for Wednesday’s trade for the Hog complex… whew… a bullish outside candlestick with the mower low from the open… what’s next?… Hogs face strong resistance just above… the downward sloping 21 DMA is at 79.65 and then the 79.80 to 80.45 resistance zone looms. The July 3rd high is at 80.85. Lots of obstacles for Hogs… If price can break out above this grouping a test of the rising 100 DMA at 82.30 is possible…. Don’t forget limits have expanded for trade on Wednesday…If traders are shell shocked and wait to see what happens to price next…. Then we should consolidate within the Tuesday range. Support is at 77.80 and then 76.175. The Lean Hog Index declined and is at 71.92 as of July 5th. The pork cutout index fell to 72.58as of July 8th.
August Live Cattle dipped below the 106.025 support level, traded to the session low at 105.85 and then it also raced higher. It didn’t trade up limit however as trendline resistance was able to contain the rally. Cattle pushed past resistance at 107.30 on its way to the session high at 108.425. This is just below the 108.65 resistance level. It also couldn’t stay above trendline resistance at 108.25, settling at 108.125. Cattle made a new high for the up move and a bullish outside candlestick is in play. A failure to take advantage of this candle and make another new high could see price retreat and fall back into its trading range. A new high could see price push past resistance and move towards resistance at 110.80. The cash market was quiet. Boxed beef cutouts crashed as choice cutouts were down 2.73 to 214.73 and select was down 2.32 to 192.09 on light demand and heavy offerings. The choice/ select spread narrowed to 22.64 and the load count was 134. Slaughter was 121,000.
August Feeder Cattle surged higher as it nearly went up limit. It opened above the 138.95 resistance level and never looked back. It blew past resistance at 140.775 and never looked back. It traded past resistance at 142.40 consolidated just above it and then at the end of the day attempted to reach the limit price but didn’t make it. The high was 143.30, just below limit and the143.50 resistance level. It settled at 142.875. This is a new high for the up move and continued upward pressure could see price test resistance at 144.25 and the 100 DMA at 144.73. A failure from resistance at 143.50 could see price consolidate within the Tuesday range. The Feeder Cattle Index bounced higher and is at 135.44 as of July 8th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, July 11th 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.