The April Lean Hogs contract continued its wild trading ways, opening higher from Friday’s settlement, trading to its morning high at 63.00 and then getting pummeled, breaking 2 handles to the low of the day (and down move) at 61.00. The market reversed course and traded up the remainder of the day, making a new high at the end of the session at 63.60 then pulling back to settle at 62.725. Whoa!! Wow! A frenetic trading session that ends up with a neutral candle. If settlement holds, a re-test of resistance at 63.325 and then the Monday high is possible. Resistance then comes in at 64.80. If settlement fails, a re-test of support at 61.85 and then the low is possible. Support then comes in at 59.825. The Lean Hog index declined and is at 62.36 as of 01/30/2019. The Pork Cutout Index collapsed and is at 73.07 as of 01/31/2019.
The April Live Cattle opened higher, made its early high at 120.60 then broke down and made a new low for the down move at 119.10. This low is just below support at 119.15 and buying came here, support holding as the market rebounded strongly. It made a new high for the session at 120.95 at the end of the day, settling nearby at 120.725. Settlement is right at resistance at 120.70. A failure from settlement could see price re-test support at 119.15. Support then comes in at 117.80. If settlement holds a test of resistance at 121.90 is possible. Cash trade was at a standstill in most regions, with a small trade at 120.00 in the Western Cornbelt. Boxed Beef cutouts were lower on light to moderate demand and moderate to heavy offerings. Choice cutouts decreased 1.44 to 211.56 and select was down 3.24 to 207.42. The choice/ select spread widened to 4.14 and the load count was 104. Slaughter was estimated to be 121,000.
March Feeder Cattle traded a little differently than Hogs and Cattle. It opened higher, made the session high early in the trading session at 137.30 then was pummeled. It broke down to the low for the day and a new low for the down move at 133.65. The low is just above support at 133.50. Buying came in and sent price upwards, stopping just below the morning high at 137.10 and then settling at 136.65. It formed a Doji candlestick with a large shadow. Settlement is just below resistance at the declining 8 DMA 136.80. It is also at the 136.75 resistance level. If price could hold above the 8 DMA, a test of resistance at 138.95 is possible. A breakdown below settlement could see price re-test support levels at 135.60, 134.25 and then 133.50. The Feeder Cattle Index declined and is at 141.98 as of 01/31/2020.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays and our next webinar will be on Thursday, February 6th 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.