Live Cattle
On Tuesday June 19, 2018 the August Live Cattle contract opened at 10470, traded to the low at 103.30 and then burst higher, consolidated and then made the session high at the end of the day at 106.65. It settled at 106.425. The market tested the 103.00 support level early and held. With other markets (grains, crude oil, equities) getting pummeled early on the reversal in the cattle markets was impressive. Its positive turn helped other markets recover off their lows, in my opinion. As one of the few markets to close in the green, it was an impressive performance. It closed above the 106.025 resistance level but hasn’t taken out the June 11th high at 106.675. A rally above here could see price test resistance at 107.35 and then make its towards resistance at 108.65. A failure from resistance could see price consolidate within the Tuesday range. On Tuesday negotiated cash trade was at a standstill in all major feeding regions. Tuesday afternoon boxed beef cutout values were lower on light to moderate demand and moderate offerings. Choice was down 1.01 at 219.70 with Select down 1.90 to close at 202.30 on 129 loads. The choice/ select spread widened to 17.40. The hide and offal value from typical fed cattle for today was estimated at 9.61 per cwt live, up 0.03 from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 120,000.
Feeder Cattle
The August Feeder Cattle contract opened at 147.90, traded to its low at 146.95 then raced higher, trading up to the high at 149.925 at the end of the day. It settled at 149.625, above the trendline at149.10. It stopped just short of resistance at 149.975, which will be the key for Wednesday’s trade, in my opinion. A break out above here could see resistance tested at 150.90 and then the 151.95 high from February 5th. Resistance then comes in at 152.30. A failure from the 149.975 resistance level could see price test support at 148.40, 147.35 and the 200 DMA at 146.975.
Lean Hogs
The August Lean Hogs contract opened below the 78.425 support level at 78.20 and attempted to reclaim that level, trading to the high at 78.575.It couldn’t stay above support and broke down to test the 50 DMA at 76.90, making the low at 76.875. It consolidated, trading between 77.875 and 77.05 for the remainder of the day. It settled at 77.725. This is just below the 77.80 key level and will key the price action for Wednesday in my opinion. Trading above 77.80 could see price test resistance at 78.425 and then 79.775. A failure from settlement could see support tested at the 50 DMA and then 76.225. Support then comes in at 75.625.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, June 21st 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.