October lean hogs fell $2.70 last week to $59.30, the lowest close in over a year, after China enacted a new 10% tariff on top of the previous tariffs for U.S. pork. News of the new tariff catches the hog market already beaten down by export disappointment in the wake of African swine fever. Unfortunate for noncommercials that put on their most bullish position since 2014 near this year's high, they are still holding 37,259 net longs and remain under pressure to liquidate with no sign of support yet. Technically, the 2016 and 2018 lows near $48 offer the most obvious support.
October live cattle closed up $1.35 last week at $99.40 per cwt, but are still close to their contract low, pressured by Friday's news of a new Chinese tariff on U.S. beef. Like hogs, cattle prices have been falling since April, and a fire taking out a Tyson plant in Kansas added more bearish distress. Technically, the trend in live cattle is down and October prices are at their lowest level in over two years. The next hope for support is at $95.00.
October feeder cattle tried to trade higher last week, but Friday's news of new Chinese tariffs knocked prices to a 32-cent loss on the week. Unlike live cattle and hogs, commercials remain net long in feeder cattle, and prices may be close to finding support, helped by the recent drop in corn prices. Technically, $131 represents a 62% retracement of the $51 rally from late 2016 to April 2019 -- a potential source of support. For now, the trend in prices remains down.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of livestock and livestock futures involve substantial risk and are not suitable for everyone.
Todd Hultman can be reached at Todd.Hultman@dtn.com
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.