The February Lean Hogs contract consolidated within the Thursday range. It traded up to resistance at 67,89, making the high just above it at 68.225 and it made the low just below the 100 DMA (67.20) 66.875. It settled at 67.25. A failure from settlement could see price revisit support at 66.55 and then the December 2nd low at 65.40. If price can hold settlement, a re-test of resistance at 67.80 and the rising 50 DMA now at 67.91 is likely. Resistance then comes in at 68/75. The Lean Hog index increased and is at 59.56 as of 01/08/2019. The Pork Cutout Index decreased and is at 73.58 as of 01/09/2019.
The February Live Cattle eked out a new high for the week reaching 127.55 on Friday. It settled at 127.425. It was a good end to the week but, price wasnt able to pierce the December 13 high at 127.90 and resistance just above it at 128.10. So, it is still consolidating below these levels. A break out above 128.10 could see price approach resistance at the March 1, 2019 high at 130.45. A failure from settlement could see price test support at 126.625 and then 125.80. Cash trade was light to moderate on moderate demand in Nebraska and the Western Cornbelt on Friday. A few early dressed purchases in both regions at 200.00 and live purchases from 124.00 to 126.00 in the Western Cornbelt. Trade was inactive on light to moderate demand in Kansas. Boxed Beef cutouts were mixed on moderate demand and heavy offerings. Choice cutouts inched higher 0.08 to 210.04 and select was down 0.13 to 206.55. The choice/ select spread widened to 3.49 and the load count was 146. Slaughter was estimated to be 120,000 for Friday and is expected to be at 32,000 for Saturday. This brings the weekly estimate to 640,000. This is above some analysts guesses for the week and above last years 631,000.
March Feeder Cattle also made a new high for the week, trading past Thursdays 147.375 high to make the new high at 147.75. It settled at a new settlement high at 147.45. However, it was just below the November 12th high at 147.775, so it is still stuck within the 147.775 – 138.275 trading range. It formed an outside candlestick as Fridays range was wider than the previous days range. Settlement was above resistance at 147.30 which is another positive for Feeder Cattle. If price can breakout above the November 12th high, a at test of resistance at 148.40 is possible. Resistance then comes in at 149.975. If settlement fails, a re-test of support at 146.20 and then 145.05 is possible. The Feeder Cattle Index increased and is at 146.44 as of 01/08/2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays, and our next webinar will be on January 16that 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.