Livestock Report

The February Lean Hogs contract gap opened higher, broke out above the 70.05 trading range high and rallied to the high of the day at 71.55. This was just shy of a limit up move and is right in the middle of the 71.325 71.85 resistance zone. With the announcement of a phase 1 agreement with China, trader excitement to expected increased sales of pork set price on its upward surge. However, a lack of details to the agreement changed the market tone and price collapsed. It closed the gap created on the open and fell to the low of the day at 68.70. This is just below the key level at 68.75. Price recovered to the middle of the sessions trading range but couldnt hold the rally and fell back to settle at 69.50. Settlement was below the key level at 69.90 and it formed a bearish shooting star candlestick. A break down below the 68.70 low could see price test support at 67.80. Support then comes in at 66.55. If price can hold settlement and rally above 69.90, a re-test of the Friday high is possible. The Lean Hog index increased and is at 59.72 as of 12/11/2019. The Pork Cutout Index ticked higher and is at 82.47 as of 12/12/2019.

The February Live Cattle broke out of its trading range and rallied to a new high for the up move. It broke out above resistance at 125.80 and then took out the high of the 123.30 - 127.15 trading range, making the new high at 127.90, just below the 128.10 resistance level. Unlike the Hog market, Cattle was able to hold its rally and settled at 127.55, a new high for settlement. A breakout above 128.10 could see Cattle move towards the March 1st high at 130.45. A failure from here could see a test of support at 126.625. Cash has traded at 190.00 on a dressed basis in Nebraska and up to 122.00 on a live basis in Iowa. Kansas/ Texas quiet so far with trades at 119.00 on a live basis on Thursday. Boxed Beef cutouts were higher on moderate demand and moderate offerings. Choice cutouts rose 0.64 to 216.29 and select was up 1.68 to 204.24. The choice/ select spread narrowed to 12.04 and the load count was 127. Slaughter was 122,000. Saturdays total is estimated at 54,000 to bring the weekly estimate to 662,000. This is well below last weeks year high at 679,000 but above last years 654,000.

January Feeder Cattle surged above resistance at 143.50 to the high of the day at 146.65. This was also a near limit up move, and it also pulled back some, settling at 145.675. The high took price above resistance at 146.20, but it held price back with the lower settlement. After market settlement trading saw price end the week at 146.50 as buyers came back after settlement was determined. A rally above the high could see resistance tested at 147.30 and then the high for the up move at 147.775. A new high could send price up to test resistance at 148.40. A break down from settlement could see price test support at 145.05 and then 144.25. The Feeder Cattle Index ticked higher and is at 143.31 as of 12/11/2019.

For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 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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**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,

bdicostanzo@walshtrading.com

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.