Live Cattle
On Friday June 29, 2018 the August Live Cattle contract blew past resistance (104.20 – 104.85), closed the Cattle on Feed gap (105.525 June 22 low – 104.90 June25 high) and kept going higher. It took out resistance at 106.025 and went limit up for the day. It settled at the limit price at 106.725. A continuation higher could see resistance tested at 107.35, the June 20 high at 107.625, and then 108.65. A failure could see price consolidate within the Friday range. Negotiated cash trade on Friday was limited on light demand in all major feeding regions. Friday afternoon boxed beef cutout values were lower on light demand and moderate to heavy offerings. Choice was down 1.28 at 211.96 with Select down 2.09 to close at 198.57 on 129 loads. The Choice/ select spread widened to 13.39. The hide and offal value from typical fed cattle for today was estimated at 9.48 per cwt live, unchanged from Thursday’s value. The estimated cattle slaughter for Friday was at 119,000 head with 57,000 on Saturday and a week to date estimate of 646,000.
Feeder Cattle
The August Feeder Cattle contract also powered its way higher, going limit up and settling at the limit price (151.325). It took out a bunch of resistance levels, including the June 20th high (150.75), putting in a new high for the up move. The next challenge for Feeders will be the 152.30 resistance level. If it can rally past here, a test of resistance at 153.50 and then 154.25 is possible. If Feeders stagnate, consolidation within the Friday range is possible.
Lean Hogs
The August Lean Hogs contract had a weak open (74.675 vs. 75.725 prior settlement), as the quarterly hogs and Pigs report (released Thursday) showed more than expected more than expected kept for breeding. This caused gap lower openings in the back-month Hogs and August opened lower in with them. August recovered quickly and rallied past the Thursday high (76.25) on its way to the Friday high at 76.925. The back-months also recovered but remained weak. A continuation higher for August could see it test resistance at 77.80 and then 78.425. Failing at the Friday high could see price consolidate within the Friday range.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, July 6th 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.