The December Lean Hogs contract went down limit on Tuesday after making a new high for the up move on Monday. It didn’t settle limit down however, settling just above it at 69.925. A police officer shooting a Hong Kong protestor put trade worries on the front burner again in this “never-ending” soap opera. Equity markets were pummeled today, adding to the trade worries. Monday’s high was at 72.725 just below resistance at 72.80. Tuesday’s high was 72.575 and sellers entered in force. Price traded all the way down to 69.60 which is just below support at 69.80. Settlement was above support. The limit down move didn’t do much technical damage in my opinion as Tuesday’s range was inside Monday’s huge range and it is well above Monday’s low (67.70). A recovery off of settlement could see price revisit resistance at 71.325 – 7180. A break out above this zone could see price move towards resistance at 72.80. A rally leads to more consolidation. A failure from settlement could see price fall back and test support at 67.80. Follow through selling could lead to a test of the rising 21 DMA at 66.841. The Lean Hog index continues its rebound and is at 56.4372 as of 9/27/2019. The Pork Cutout Index has also turned around and is at 71.59 as of 9/30/2019.
December Live Cattle continued its consolidation within Friday’s range. The Tuesday high was 110.725. just a tick below the Friday high and below resistance at 110.80. It traded down to 10.40 and settled at 109.825. If price can overtake resistance at 110.80 a move towards resistance at 112.35 is possible. A failure from settlement could see price revisit support at 108.65. A break down below 108.65 could lead to a test of support at 107.30. The cash market was at a standstill. Boxed beef cutouts were mixed with choice cutouts up 1.03 to 213.47 and select down 1.06 to 186.05 on moderate to good demand and offerings. The choice/ select spread widened to 27.42 and the load count was 156. Slaughter was 117,000.
November Feeder Cattle broke down and trade through the 140.775 support level to the low at 139.775. It ticked higher and settled at 140.175. The settlement below support is worrisome for Feeders and a breakdown below the 13 DMA (139.725) could see price test support at 138.95 and then the 100 DMA nearby at 138.35. If the 13 DMA provides support a recovery to the 8 DMA at 141.521 is possible. The Feeder Cattle Index continued its charge higher and is at 142.95 as of September 30th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, October 3rd 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.