The February Lean Hogs contract opened higher and made an early attempt to rally then ran into a brick wall at 69.275. It reversed course and tested the 100 DMA at 67.88 making the session low at 67.90. Hogs remain in a trading range with the high end at 69.875 and the low end at 65.40 as the trade war and record production has kept Hogs prices in check, in my opinion. A break out above 69.875 could see price test resistance at 71.325. Resistance then comes in at 71.80. A break down below the 100 DMA could see price test support at 66.72. The Lean Hog index ticked higher and is at 57.38 as of 12/2/2019. The Pork Cutout Index fell and is at 81.26 as of 12/3/2019.
The February Live Cattle failed at the 125.80 key level, making the high at 125.875 and then breaking down and trading through the 124.30 support level to the low at 123.975. It settled below support at 124.175. A break down below settlement could see support tested at 122.80. A breakout above settlement could see resistance tested at 125.80. Resistance then comes in at 126.625. Cash traded on the fedcattleexchange.com auction between 118.00 to 119.50. A total of 860 head were sold out of 1,189 head. Boxed Beef cutouts were sharply lower on light demand and heavy offerings. Choice cutouts fell 3.20 to 226.95 and select dropped 2.00 to 210.31. The choice/ select spread narrowed to 16.64 and the load count was 153. Slaughter was 121,000.
January Feeder Cattle opened (142.375) at the 200 DMA (142.32) and made an early attempt to rally to resistance (143.50). It failed at the high of the day (142.90) and fell apart. It traded down to support at 140.775, making the low just below it at 140.375. It settled at 140.875. Trading below 140.775 could test support at the 100 DMA at 139.96. A break down from the 100 DMA could see price run down to the 138.95 support level. The November 22 low at 138.275 is next. The Feeder Cattle Index was higher and is at 145.19 as of 12/3/2019.
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.