Live Cattle
Packers continue to be able to squeeze producers as box prices are rising and they are still able to pressure cash prices lower, giving themselves a nice profit. With cattle perceived to be at ample levels, packer leverage is high. Even though demand has been high, they are able sell traders on the idea that demand could disappear and prices could collapse. They have lowered their bids for the week and will wait till Friday to trade cash unless producers agree to trade at the lower bids. With futures unable to move higher packers are ahead in the game. On Wednesday negotiated cash trade was mostly inactive in all major feeding regions. Wednesday afternoon boxed beef cutout values were firm on Choice and weak on Select on light to moderate demand and moderate to heavy offerings. Choice was up 0.31 at 209.95 with Select down 0.66 to close at 200.61 on 139 loads. The choice/ select spread widened to 9.34. The hide and offal value from a typical slaughter steer for today was estimated at 9.21 per cwt live, unchanged when compared to Tuesday’s value. Estimated cattle slaughter for today is 117,000. On Tuesday in Nebraska trading was limited on very light demand. Compared to last week live cash trades moved 0.50-2.00 lower at 109.50. In Nebraska dressed cash trades moved mostly at 175.00. For Tuesday in the Southern Plains and Colorado trading was at a standstill. In the Western Cornbelt trading was inactive on very light demand. However, not enough for a full market trend in these feeding regions. Last week in the Southern Plains and Colorado, live cash trades moved at mostly 111.00. For the previous week in the Western Cornbelt, live and dressed trades moved mostly at 110.00 and from 174.00-176.00. On Wednesday August 15, 2018 the October Live Cattle contract trade above the108.65 resistance level, rallying to a high at 109.85 where it ran into stiff resistance at the 8 DMA also at 109.85. It fell back near support and then settled above support at 109.00. A break down from settlement could lead to a test of support and then the Tuesday low (107.90). A breakdown below the 107.35 support level could see support at 106.025 tested. A rally above settlement could see price move towards resistance at 110.80.
Feeder Cattle
The October Feeder Cattle contract poked its nose above the August 8th high (150.25) trading up to 150.30 before falling back and settling at 149.275. It also was blocked by a short-term moving average. For Feeders it was the 13 DMA, also at 150.30. Consolidation remains the key word for Feeders. The August 8th range (150.25 – 147.20) continues to contain price. If price breaks down below settlement a test of support at 148.40 and then 147.35 is possible. A break down from the August 8th low could see price test support at 146.20 and 145.05. Support then comes in at 144.20. A breakout higher could see resistance tested at 149.975, 150.90 and then 151.55. Resistance is then at 152.30.
Lean Hogs
The October Lean Hogs contract consolidated yet again, trading within the Monday range, reversing the Tuesday trade (52.925 – 51.50- 51.85), going from 51.25 to 52.75 and settling near the high at 52.475. A rally above the high could test resistance at 53.80. Resistance then comes in at 55.475. A breakdown below the low could see price test support at 49.925 and then 48.725.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, August 16th 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.