The December Lean Hogs opened lower and tested yesterday’s 63.45 low, making the Wednesday low just above it at 63.50. Then in usual recent Hog fashion, it reversed course and raced higher, reversing yesterday’s reversal of Mondays rally. Huh??? Well, Hogs have been volatile; weighing massive US production vs the ASF in Europe and especially Asia (expect huge exports). It’s been up, down, up, down… down and up and down. The massive production has overwhelmed the high levels of exports and it has been trending lower with the hope of a huge rally always in the back of traders’ minds. Trade optimism rallies price and then the reality of cash prices not cruising higher brings futures back to earth… Price is still holding above the October 8th low and today’s rally took it back to the 50 DMA (66.50) the 66.55 resistance level. It failed just below it at 66.475 and pulled back to settle at 65.775. A break out above resistance could see price test resistance at 67.80. A break down below settlement could see price revisit the low and then the October 8 low at 63.075. The Lean Hog index fell and is at 63.51 as of 10/28/2019. The Pork Cutout Index inched higher and is at 75.84 as of 10/29/2019.
December Live Cattle ignored the hanging man candlestick and rallied past resistance at 117.80 to a new high for the up move at 118.60. It settled nearby at 118.30. A push above the high could see resistance tested at 119.15. Aggressive buying could take price up to resistance at 120.75. A pullback from settlement could see support at 117.80 tested and then 116.55. The cash market traded at 112.00 in Kansas. Boxed beef cutouts were mixed with choice cutouts down 0.50 to 230.05 and select up 3.10 to 206.67 on light to moderate demand and offerings. The choice/ select spread narrowed to 23.38 and the load count was 113. Slaughter was 117,000.
January Feeder Cattle broke out above resistance at 142.40 and then powered past resistance at 143.50 and then 144.25 to the high at 144.975. It settled nearby at 144.80. This is just below the 145.05 resistance level. A failure from settlement could see price consolidate within the Wednesday range. A rally past resistance could see price test the 146.20 resistance level. Resistance then comes in at 147.30. The Feeder Cattle Index rose and is at 145.08 as of October 29th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, October 31st 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.