The October Lean Hogs contract opened with a knockdown blow to the chin gap opening lower on the day. With expanded limits for the session it almost traded down the expanded limit for the October contract. Several months did trade down the expanded limit. The October low was 61.50 which is just below the 61.80 support level. In a stunning turnaround, Hogs surged and nearly went up the expanded limit, reaching the session high at 69.90 just below resistance at 70.125. Hogs then sank and settled at 67.425. If price can get past 67.80 resistance, a test of the 69.90 high is possible. A failure from settlement could see price test support at 66.55 and then 64.80. China devalued its currency, escalating the trade war with the United States. The Lean Hog Index was up and is at 84.64 as of August 1st. The pork cutout index climbed and is at 86.68 as of August 2nd.
October Live Cattle also opened lower, traded to the 104.85 support level (low of day) and the reversed and rallied past resistance at 108.65 to the high at 109.175. It then pulled back and settled just above support at 107.30 at 107.40. Continued weakness could see price test support at 106.025 and then 104.85. If support holds a return to resistance at 108.65 is possible. The cash market traded a tiny amount at 114 in Iowa. Boxed beef cutouts were lower for choice cutouts at 0.03 to 214.70 and select was up 1.04 to 191.67 on moderate to fairly good demand and moderate offerings. The choice/ select spread narrowed to 23.03 and the load count was 106. Slaughter was 119,000.
September Feeder Cattle opened lower and collapsed nearly going down limit from yesterday’s settlement. It traded to the low at 134.575, just above support at 134.25. In an amazing reversal it rallied more than six handles off the low to the session high at 141.475. This is just above resistance at 140.775. It pulled back and settled at 139.40. A rebound from settlement could see price test resistance at 140.775. A breakout above the high could see price test resistance at 142.40. A failure from support at 138.95 could see price revisit support at 136.75 and then 134.25. The Feeder Cattle Index declined to 141.62 as of August 2nd.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, August 8 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.