Live Cattle
Thursday May 31, 2018 was give back day in the August Live Cattle contract. After going limit up on Wednesday, the August contract couldn’t hold onto its gains, making the session high at 105.20 then breaking down and almost going limit down, making the low at 101.90. It consolidated between 103.125 and 102.15 for most of the session, and then the last 5 minutes saw a furious rally, taking price from 102.375 to 104.375. It settled at 103.95 eliminating most of the sessions decline. This end of session rally could provide the fuel for price to end the week on a strong note. If price can take out the 105.20 Wednesday high, a test of resistance at106.025 is possible. A failure from settlement could see price consolidate within the Thursday range. On Thursday negotiated cash trade in Kansas is light on light demand with live sales at 110.00. In the Western Corn belt trade is light on light demand with a few early dressed trades at 178.00. Trade is slow in all other major feeding regions. Thursday afternoon boxed beef cutout values were steady to weak on light to moderate demand and moderate to heavy offerings. Choice was down 0.48 at 228.20 with Select up 0.09 to close at 204.47 on 154 loads. The choice/ select spread narrowed to 23.73. The hide and offal value from typical fed cattle for today was estimated at 9.55 per cwt live, down 0.03 from Wednesday’s value. The estimated cattle slaughter for Thursday was reported at 121,000, last week 121,000 and a year ago 119,000.
Feeder Cattle
The August Feeder Cattle contract made a new high for the up move early in the trading session, reaching 149.50 which is just below the 149.975 resistance level. It also traded above the April 30th high (149.075), keeping the short-term uptrend intact. It couldn’t hold onto the gains however, and it broke down hard, trading to the session low at 145,825. A strong rally in the last 5 minutes of trading took price up to 147.575 and it settled nearby at 147.00. A breakout above here could see price retest resistance at 149.975 and then150.90. Resistance then comes in at 152.30. A failure from settlement should see price consolidate within the Thursday range.
Lean Hogs
The July Lean Hogs contract opened (79.625) below the Wednesday high (80.25), made a meek attempt to overtake it, making the session high at 80.05 and then collapsed, trading down to the session low at 77.35. It stabilized and settled at 78.05. Settlement was above the 77.80 support level and will be key to trading on Friday, in my opinion. Trading above settlement could lead to tests of resistance at 78.425 and then 79.775. Trading below 77.80 could lead to a test of support at 76.225. Support then comes in at 75.625.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, June 1st 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.