The October Live Cattle contract made a new low for the move on Monday July 31, 2017, making its way down to test support at the 110.80 level, making the low at 111.25. A late day rally took the October contract past the open (112.45), which also was the session high to a new high for the day at 113.10. The market stepped back from here and the session ended at 112.15. The pullback to the middle of the range left a spinning top candle indicating indecision at the new low. With the negotiated cash trade inactive on Monday, Tuesday will be important in setting the tone for the fedcattleexchange auction on Wednesday. The head count for the auction is very low, with only 1,063 head for sale. Resistance is at 113.80 and then 114.925. Support is at 110.80 and 108.675. Monday afternoon boxed beef cutout values were lower on Choice and higher on Select on light to moderate demand and offerings. Choice was down .47 at 205.75 with Select up 1.02 to close at 197.84 on 113 loads. The choice/ select spread narrowed to 7.91. The estimated cattle slaughter for Monday was reported at 111,000.
The August Feeder Cattle contract broke down from the opening high (146.10) and tested support at the 100 DMA (144.925) on Monday, trading down to the session low at 144.65. Support held and a late day rally took the August Feeder Cattle to a new session high up at 147.40. The market pulled back at the end of the session forming a spinning top candle. The inability to push below the 100 DMA creates indecision in Feeder Cattle. Trading above the 147.40 high could lead to a test of resistance at 148.60. Resistance then comes in at 149.975. A breakdown below the 100 DMA could lead to a test of support at the July 6th low at 141.20.
The October Lean Hogs is below resistance at 67.80. In a quiet session, it traded in a tight range between 66.75 and 65.925. it ended at 66.025. A break down from the low could lead to a test of support at 64.90. A rally above the high could see a test of resistance at 67.80.
For those interested I hold a weekly livestock webinar on Friday, August 4 at 3:00pm. 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.