The February Lean Hogs contract spent its eighth day in a row within the December 13th trading range. It opened higher and made an attempt to make a new high but failed. It traded to 71.50, which is just below the December 13th high at 71.55. Price collapsed with the failure at the high and traded down to the low at 70.05. The low was just above the 69.90 support level. Price was able to recover and it settled at 70.90. The high is still in the middle of the 71.325 – 71.85 resistance zone. If price can break out above 71.55 – 71.85, a test of resistance at 72.80 is possible. The February high (the day it became lead contract) is next at 73.40. A break down below the 69.90 support level could see price test support at 68.75. The Lean Hog index ticked higher and is at 59.09 as of 12/23/2019. The Pork Cutout Index declined and is at 77.25 as of 12/23/2019.
The February Live Cattle opened at the 125.80 key level and never looked back. It rallied to the high of the day at 127.00 and then consolidated its gains the rest of the session. It settled at 126.80. Settlement was just above resistance at 126.625. If price can hold above 126.625, a test of resistance at 128.10 is possible. A failure from settlement could see price test support at 125.80 and then the December 23rd low at 125.225. Cash was at a standstill. Boxed Beef cutouts were mixed on light to moderate demand and heavy offerings. Choice cutouts fell 1.42 to 210.15 and select was up 0.61 to 205.25. The choice/ select spread narrowed to 4.90 and the load count was 202. Slaughter was 120,000.
January Feeder Cattle tested support at 143.50 on the open, trading to the low at 143.35 before racing higher and trading to the high of the day at 145.70. this is just above resistance at 145.05. It consolidated above this key level the rest of the day and settled just below the high at 145.45. If price can hold 145.05 on a test on Friday, a recovery to resistance at 146.20 is possible. This is just below the December 13th high at 146.65. Aggressive buying could see price push past the high and make its way toward resistance at 147.30. A failure from 145.05 could see price test support at 144.25 and then revisit 143.50. The Feeder Cattle Index dipped lower and is at 145.81 as of 12/25/2019.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, but due to the holiday season our next webinar will be on January 9th 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.