The February Lean Hogs contract continued its consolidation on Monday. It is now stuck between resistance at the declining 100 DMA (68.54) and support at 66.55. Monday’s range was 68.25 and 66.825. A break out above the 100 DMA could see resistance tested at 69.80. A break down below support could see the rising 21 DMA tested at 65.58 and then 64.80. According to the USDA website “The U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) today published a final rule clarifying the requirements for reporting foreign sales of beef and pork under the Export Sales Reporting Program. It clarifies that “muscle cuts” of beef and pork include whole carcasses, whether divided in half or further subdivided into individual primals, sub-primals, or fabricated cuts, with or without bone. Carcasses that are broken down, boxed, or sold as a complete unit are muscle cuts.” This is effective immediately. Traders and analysts have requested the USDA step in and disclose what is reportable as they believe exports of pork have been under reported (esp. to China). The USDA said “Timely reporting and publishing of agricultural export sales data is key to effectively functioning markets.” The Lean Hog index increased and is at 59.76 as of 11/21/2019. The Pork Cutout Index fell and is at 84.78 as of 11/22/2019.
The February Live Cattle recovered Friday’s losses and more. It traded all the way back to resistance at 125.80, making its high just above it at 125.825. It pulled back at the end of the session to settle at 125.15. It is back in its 124.30 to 125.80 trading range. A breakout above the high could see resistance tested at 126.625. Resistance then comes in at 128.10. A failure from settlement could see support at 124.30 revisited. Cash was at a standstill. Boxed Beef cutouts were higher on moderate demand and moderate offerings. Choice cutouts rose 0.67 to 233.24 and select was up 0.59 to 211.91. The choice/ select spread widened to 21.33 and the load count was 130. Slaughter was 118,000.
January Feeder Cattle raced higher, nearly going up limit and recovering all of Friday’s losses and more as it made the high at 143.30. This is just below resistance at 143.50 and this proved to be the tipping point as it toppled at the end of the day to settle at 141.975, below Friday’s high (142.375) and the 200 DMA at 142.36. A rally above the high could see resistance tested at 144.25 and then 145.05. A breakdown from settlement could see support revisited at 140.775. The Feeder Cattle Index was lower and is at 145.33 as of 11/22/2019.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 5th 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.**
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.