The December Lean Hogs contract consolidated within Tuesday’s trading range forming an inside candle. It settled at 70.625. Settlement was below the 71.325 – 71.85 zone. Wednesday’s failure to make a new high puts pressure on Hogs to resume the down trend. Yesterday’s limit move higher is below the 9/30/2019 high at 72.725. If price fails to bounce back from today’s decline a resumption of the down trend is possible. Today’s low was below the 6980-support level at 69.65. A breakdown from the low could see price test support at 67.80. If price recovers and pushes past the 72.075 high a test of resistance at 72.80 and the downward sloping 100 DMA (72.99) is possible. Resistance then comes in at 74.25. The 200 DMA is at 74.71. This could be firm resistance. The Lean Hog index continues to rise and is at 62.92 as of 10/14/2019. The Pork Cutout Index continued its climb and is at 77.28 as of 10/15/2019.
December Live Cattle negated yesterday’s tweezer top formation making a new high at 114.20. It did have a decent pullback in trading below yesterday’s low with today’s low at 112.625. The rally has been grinding. Today’s session formed a bullish outside candle but another hanging man candlestick. It settled just below the 113.90 resistance level at 113.875. The declining 200 DMA is just below at 113.78. Resistance is just above at 114.65. This is a difficult area for cattle. A failure form settlement could see price re-test support at 112.35. A break down from here could see a test of support at 110.80. Taking out the session high could see price test resistance at 114.65 and then 116.55. The cash market was quiet. Small trades in Iowa at 110.00 and 111.00. Boxed beef cutouts were mixed with choice cutouts up 0.26 to 218.28 and select down 0.11 to 191.37 on moderate demand and moderate offerings. The choice/ select spread widened to 26.91 and the load count was 154. Slaughter was 116,000.
November Feeder Cattle continued its consolidation within Monday’s range. It settled at 145.925. Settlement is just below the key level 146.20 and could key trade for Thursday. A rally above 146.20 could see price challenge resistance at 147.30. Resistance then comes in at 148.40. A failure from settlement could see price test support at 145.05 and then 144.25. The Feeder Cattle Index rose and is at 145.12 as of October 15th .
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, October 18th at 2:00 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.