The October Lean Hogs contract broke out above Monday’s high (64.475) reaching 65.825 for the Tuesday high. It pulled back from here and settled at 64.975. The high, however, is still within Friday’s trading range. The session low was 63.375, just above support at 63.325. This is the second day of trading within Friday’s breakdown candle. It is still within the huge range from August 5th. Still having 2 handle plus trading ranges with volatile trading sessions. But it hasn’t gone anywhere since August 5th. A failure from settlement could see support tested at 63.325 and then 61.80. A rally from settlement could see price test resistance at 66.55. Resistance then comes in at 67.80. The Lean Hog index fell to 78.55 as of 8/16/2019. The Pork Cutout Index declined to 87.55 as of 8/19/2019.
October Live Cattle staged a nice reversal of Monday’s failed rally. It opened strong and rallied past resistance at 99.375 and 100.275 to the session high at 100.575. It dipped at the end of the session and settled at 100.00. Another rally past 100.275 could see resistance tested at 101.625. A test of resistance here could see trader’s eyeing an attempt to move towards closing the second gap created by the gap down day at 103.75 on August 12th. A failure from settlement could see support tested at 99.375 and then 98.10. The cash market was at a standstill. Boxed beef cutouts were mixed with choice cutouts up 2.57 to 241.70 and select down 0.25 to 214.27 on moderate to fairly good demand and light offerings. The choice/ select spread widened to 27.43 and the load count was 94. Slaughter was 116,000.
October Feeder Cattle opened higher and rallied to resistance at 135.60 making the high at 135.975. Once again it couldn’t hold its gains and it collapsed. It sliced through support levels 134.25 and 133.50 down to a new low for the day at 133.25 and settled at 133.65. A failure the low could see price test support at 132.075 and then 131.25. Support then comes in at 129.65. If settlement holds a retest of resistance at 133.50 and then 134.25 is possible. Resistance then comes in at 135.60. The Feeder Cattle Index rose to 137.24 as of August 19th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, August 22 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.