The December Lean Hogs gap opened lower (64.75) and broke down past the 64.25 support level making the session low at 64.15. Futures recovered and closed the gap Yesterday low – 65.20) on its way to the 66.55 resistance level. It topped at 66.975 and fell back, settling at 65.825. If December Hogs can rebound on Thursday and take out the Wednesday high, a test of resistance at 67.80 is possible. A failure from settlement could see price revisit support at 64.25. A breakdown from here could see a test of support at 63.325 and the October 8 low at 63.075. This area must contain any selling pressure as a new low would continue the downtrend, in my opinion. The Lean Hog index dipped and is at 65.47 as of 10/21/2019. The Pork Cutout Index dropped and is at 77.01 as of 10/22/2019.
December Live Cattle opened at the session low (113.375) and then rallied the remainder of the session. The low is just below the 200 DMA (113.55). Bulls defended this area and then took price to resistance at 114.65. It breached it mid-session, consolidated and then rallied to the session high at 115.45. It settled nearby at 115.25. The strong close puts resistance at 116.55 in play. A failure from the high could see support at 114.65 tested. Support then comes in at 113.90 and the 200 DMA. The cash market was at a standstill. Boxed beef cutouts were higher with choice cutouts up 2.35 to 223.28 and select up 0.86 to 198.94 on light to moderate demand and offerings. The choice/ select spread widened to 24.34 and the load count was 109. Slaughter was 118,000.
January Feeder Cattle is now the lead contract as its volume is higher than the November contract. It tested support at 138.95 on the open making the low at 138.875. It rallied past resistance at 140.775 to the session high at 141.475. It settled at 141.20. A failure at settlement could see support revisited. A continuation higher could see resistance at 142.40 tested. The Feeder Cattle Index fell and is at 144.93 as of October 21st.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, October 24th 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.