The October Lean Hogs contract gap opened higher and traded up limit before a slight pullback took price lower and it settled up 2.725 at 59.175. The December contract neared its limit price and settled up 2.60 at 57.975. The December contract is now the lead contract and will be the focus for traders going forward. The shutdown of processing plants in North Carolina due to Hurricane Florence has reduced slaughter levels and has created a short-term shortage of supply, in my opinion. The flooding has created hazardous conditions and travel is limited and not safe. It is unknown when operations will be normal as the flooding is receding in some areas and rising in other areas. The CME Lean Hog Index has jumped to 53.48 as of September 14, 2018 and the CME Pork Cutout Index has risen to 71.82 as of September 17, 2018. The December Hogs reached a high of 58.075, just below resistance at 58.25. A breakout above resistance could lead to a test of resistance at 59.975. If processing plants ramp up production and slaughter levels start climbing, price could break down and test support at 57.025 and then 55.475. Lean Hogs could remain volatile as the market reacts to the trade wars, the African swine fever and the fallout from the hurricane as the days move forward.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, September 20th 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.