The December Lean Hogs contract made an early attempt to rally as positive trade news sparked some buying. The rally stalled just above the 50 DMA (68.90) at 69.075. Price then grinded lower and then accelerated to go down limit for the low of the day at 64.95. The lower limit move came about as the Chinese canceled a proposed trip to visit farmers in Montana. This upset the market and prices collapsed. It was able to bounce off the limit move and settled at 66.25. Settlement is below the key level at 66.55. If price cant recover above settlement on Monday a test of the Friday low and then support at 64.80 is possible. Support then comes in at 63.325. A rebound from 66.55 could see price revisit resistance at 67.80 and then the declining 50 DMA. The Lean Hog index continues to fall and is at 56.32 as of 9/18/2019. The Pork Cutout Index fell is also declining and is at 68.43 as of 9/19/2019.
December Live Cattle drifted lower for the early session then the negative trade news sent cattle to the session low at 104.35. It recovered and settled at 105.15. The high of the day was 105.875. A quiet day in front of the Cattle on Feed report. The report showed on feed down 1%, placements down 9% and marketings down 2%. Placements were estimated to be down 5.9%, on feed down .7% and marketings down 1.7%. I think the placements were bullish and futures could rally on Monday. A breakout above 106.025 could see price test resistance at 107.30 and then 108.65. A failure from the 100 DMA (105.40) could see price revisit support at 104.85 104.20. The cash market traded at 101.00 103.00 and 160.00 165.00 this week. Boxed beef cutouts declined with choice cutouts down 1.20 to 216.97 and select down 0.44 to 191.72 on light to moderate demand and offerings. The choice/ select spread narrowed to 25.25 and the load count was 121. Slaughter was 116,000. Slaughter for Saturday is expected to be 75,000 which will bring the weekly slaughter to 658,000. This is higher than last weeks 629,000 and last years 653,000. So far weekly slaughter not materially affected by the Tyson fire.
October Feeder Cattle was quiet today as it tested the declining 100 DMA at 138.359 making the low early in the session at 138.425. It bounced and traded to the high at 139.60 and then traded near the low after negative trade news. It the traded to the high at the end of the session and settled at 139.20. A rally from settlement could see price test resistance at 140.775. Resistance then comes in at 142.40. A breakdown below the 100 DMA could see price test support at 136.75 and then 135.60. The Feeder Cattle Index rose and is at 138.53 as of September 19th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, September 19that 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.
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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.