Live Cattle
The October Live Cattle contract reversed course on Wednesday, August 23, 2017, as the declining 13 DMA (107.625) provided resistance for the second day in a row. The session high (107.90) poked above the moving average and then Live Cattle broke down and traded down to test support at 106.00. It made its low at 105.775 and ended the day below support at 105.95. A failure from here could see a test of support at 104.85 and then 103.00. Resistance is at the 8 DMA (106.95), the 13 DMA and then 108.675. The fedcattleexchange auction took place on Wednesday morning with 1,067 head for sale. Nothing sold during the auction with 2 lots (107.00 and 107.25) rejected by producers. The negotiated cash market saw some trading at 106.00 – 107.00 for live and 172.00 – 173.00 for dressed. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and heavy offerings. Choice was down 0.70 at 192.33 and Select down 1.42 to 189.47 on 159 loads. The choice/ select spread widened to 2.86. The estimated cattle slaughter for Wednesday was reported at 116,000.
Feeder Cattle
The September Feeder Cattle drifted lower on Wednesday, also failing to overtake the 13 DMA (142.60). It reached a high of 142.90 and the dipped down to a low at141.20. It ended the session just below the 8 DMA (141.95) at 141.65. Breaking above the Wednesday high could lead to a test of resistance at 143.50. Resistance then comes in at 144.65. A pullback from the 8 DMA could lead to a test of support at 140.75, 139.90 and then 138.95.
Lean Hogs
The October Lean Hogs contract broke down to a new low at 62.775. It found support at that level and ended the session at 63.325, forming a hammer candle stick. A rally above the session high (63.775) could lead to a test of the 64.90 resistance level. A continued break down could lead to a test of the 61.80 support level. Pork belly prices continued to decline, as it was down 6.31 to 152.01. Pork Belly prices have been a key driver for the Lean Hogs and a continued break down could lead to a bigger decline in the futures market.
For those interested I hold a weekly livestock webinar on Thursday, August 25 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.
**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.