The April Lean Hogs contract continued its wild trading ways, opening higher from Monday’s settlement, trading to its high at 64.375 and then getting pummeled. This time it fell more than 2 handles, stopping just below support at 61.80 at 61.775. It bounced and settled at 62.325. Price failed just below resistance at 64.80. If settlement fails, a re-test of support at 61.85 and then the Monday low at 61.00 is possible. Support then comes in at 59.825. If settlement holds a re-test of resistance at 63.325 and then the Tuesday high is possible. The Lean Hog index fell and is at 61.41 as of 01/31/2020. The Pork Cutout Index collapsed and is at 71.72 as of 02/03/2020.
The April Live Cattle opened higher, rallied to its high at 121.80 then broke down and traded to the session low at 120.45. It settled nearby at 120.65. 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 re-test of resistance at 121.90 is possible. Cash trade was at a standstill in most regions, with a small trade at 192.00 in the Western Cornbelt on a dressed basis. Boxed Beef cutouts were mixed on light to moderate demand and moderate offerings. Choice cutouts decreased 0.63 to 210.93 and select was up 0.09 to 207.51. The choice/ select spread narrowed to 3.42 and the load count was 97. Slaughter was estimated to be 122,000.
March Feeder Cattle opened higher and traded to the high at 138.075, then broke down to the low at 136.40. It recovered and ended the trading session in positive territory at 137.50. The low came in below support at 136.75 but the declining 8 DMA stopped the decline as the low was right at its level (136.40). A breakdown below settlement could see price re-test support levels at 136.75, the 8 DMA and then 135.60. If settlement holds a re-test of the Tuesday high is possible. Resistance then comes in at 138.95. The Feeder Cattle Index hasn’t updated 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.**
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.