Live Cattle
On Wednesday May 23, 2018, the August Live Cattle contract opened at100.30 dipped to the low (100.25), and then reversed course, taking out the Tuesday high (101.10) and resistance at 101.625 on its way to the high at 102.90. It settled at 102.80. This is just shy of resistance at 103.00. This will be the key to Thursday’s trade, in my opinion. A breakout above 103.00 could test the104.20 – 104.85 resistance band. A failure from the high could see price consolidate within the Wednesday range. Negotiated cash trade on Wednesday was at a standstill in all major feeding regions. Wednesday afternoon boxed beef cutout values were firm on Choice and lower on Select on light to moderate demand and moderate offerings. Choice was up 0.73 at 230.08 with Select down 0.82 to close at 205.04 on 140 loads. The choice/ select spread widened to 25.04. The hide and offal value from a typical slaughter steer for today was estimated at 9.46 per cwt live, unchanged when compared to Tuesday’s value. Estimated cattle slaughter for today is 119,000, last week 118,000 and a year ago 117,000.
Feeder Cattle
The August Feeder Cattle contract opened at 140.575, traded to the session low at 140.325, found support (50 DMA (140.325) and rallied to the morning high at 142.85. It consolidated around the 142.425 key level, trading to a higher low at 141.95 then burst higher at the end of the day, reaching 143.60 for the day’s high. This is above the rising 100 DMA (143.225) and the 143.50 resistance level. It dipped lower and settled at 143.35. Follow through to the up side could see price test resistance at 144.20 and 145.05. Resistance then comes in at 146.20. A failure from the 100 DMA could see price consolidate within the Wednesday range.
Lean Hogs
The July Lean Hogs contract is now the lead contract because its volume is higher than the June volume. August opened at 75.20, dipped to the low (75.175) then burst higher, trading to the session high at 77.25. This just under the May 11th high at 77.475 (June contact). It couldn’t hold onto its gains and broke down to 75.725. It recovered at the end of the day and settled at 76.225. This is right at the 76.225 key level and will be the key level for trade on Thursday, in my opinion. A rally above 76.225 could test trendline resistance at 76.575 and then the Wednesday high. Resistance then comes in at 77.475 and 77.80. A failure from 76.225 could see price test support at 75.625 and then 74.125.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 24th 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.