The October Lean Hogs contract opened higher and rallied to resistance at 80.40, making the high of the day at 80.275. It failed and broke down to the session low at 78.075. This is just above the 77.80 support level. It recovered and settled at 79.20. A failure from settlement could see price retest support at 77.80. Support then comes in at 76.175. A rally above the high could see price move towards resistance at 83.325. The Lean Hog Index has recovers and is at 72.40 as of July 18th. The pork cutout index jumped to 76.01 as of July 19th. The cold storage report is out and it showed frozen pork supplies down 1% from the previous month but up 11% from last year. Stocks of pork bellies were down 12% from last month but up 6% from last year.
October Live Cattle grinded higher and made its high at 109.325. It settled at 109.15 and is just above resistance at 108.65. The low was at 108.20 and is above support at 107.30. If cattle can rally above the high, a test of resistance up at 110.80 is possible. A failure from settlement could see price revisit the 107.30 support level and then move towards support at 106.025. I think the cold storage report could give cattle a boost as total pounds of beef in freezers were down 3% from the previous month and down 12% from last year. The cash market was quiet. Boxed beef cutouts were mixed as choice cutouts were down 0.10 to 213.32 and select was up 0.08 to 189.59 on light to moderate demand and offerings. The choice/ select spread narrowed to 23.73 and the load count was 109. Slaughter was 114,000.
August Feeder Cattle broke out above resistance at 140.775 and reached 142.325 for the session high. This is just below resistance at 142.40. It settled just below it at 142.175. A rally above the high could see price resistance143.50. The high for the up move is at 143.75. A break down below settlement could see price retest support down at 140.775. The Feeder Cattle Index declined to 138.16 as of July 19th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, July 25th 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.
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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.