The April Lean Hogs contract opened higher. traded to its high at 63.15 and then broke down, trading to its low at 61.65. The initial attempt to trade higher saw price fail just below resistance at 63.325. The breakdown took price just below support at 61.80. Settlement was just above support at 61.875. If settlement fails, a test of support at 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 declined and is at 61.10 as of 02/03/2020. The Pork Cutout Index once again collapsed and is at 69.95 as of 02/04/2020.
The April Live Cattle opened higher, up-ticked to its high at 121.20 then broke down and traded to a new low for the down move at 118.80. It settled nearby at 119.175. Settlement is right at support at 119.15. A failure from settlement could see price re-test support at 117.80. Support then comes in at 116.55. If settlement holds a re-test of resistance at 120.70 is possible. Resistance then comes in at 121.90. Cash trade was at a standstill in most regions, with a small trade at 193.00 in the Western Cornbelt on a dressed basis. Boxed Beef cutouts were mixed on light to moderate demand and offerings. Choice cutouts decreased 0.21 to 210.72 and select was up 0.43 to 207.94. The choice/ select spread narrowed to 2.78 and the load count was 133. Slaughter was estimated to be 122,000.
March Feeder Cattle opened higher and up-ticked to its high at 138.075, the same as Tuesday’s high. It then broke down and traded to the low at 135.50. It settled nearby at 135.675. The low came in below support at 135.60 and the declining 8 DMA at 135.91. Settlement is right at these levels. A breakdown below settlement could see price test support at 134.25 and then 133.50. If settlement holds a re-test of resistance at 136.75 is possible. Resistance then comes in at 138.95. The Feeder Cattle Index declined on 2/3/2020 to 141.74 and continued its decline on 2/4/2020 to 141.43.
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 6that 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.