April Live Cattle shook off Tuesday’s weak close with a rally right from the opening of Wednesday’s trading session. Anticipating a strong fedcattleexchange auction, traders followed last Wednesday’s script and rallied price into the 10 AM CT auction. This week, however, the auction didn’t disappoint as buyers were aggressive in their pursuit of cattle. Cattle auctioned from Texas traded from a low of $125.00 to a high of $128.25. Kansas cattle traded from $125.00 to $128.00. Nebraska cattle traded from $127.00 to 131.50. Futures rallied until the auction ended, reaching the high of the day during the auction at 118.075. Price went sideways for the remainder of the session, trading between a low of 117.40 and a high of 117.85. It ended the session at 117.65, once again below resistance at 117.825. Even with a strong auction and a strong cash trade after the auction, Futures couldn’t close above resistance. Futures also stayed below the 118.70 trendine resistance on the rally to the high. Cash traded at $132.00 live, and $210.00 dressed in Iowa/ Minnesota, $131.00 – $131.50 live, and $210.00 dressed in Nebraska. Texas and Kansas traded between $127.00 and $128.00. Wednesday afternoon boxed beef cutout values were higher on Choice and lower on Select on light to moderate demand and light offerings. Choice was up 1.18 at 221.32 with Select down .75 to settle at 213.14.
Futures are trapped between support (Wednesday low – 116.20) at 8 DMA (116.475) and the 117.825 and 118.7 resistance levels. If trendline resistance (118.70) is taken out a test of the January 20 high (119.875) is possible, then the January high at 121.45 becomes the focal point. Continued strength could push price towards resistance at 124.675.A break down below support and could lead to a test of trendline support at 114.70 and then the 21 (113.375) and 50 (112.375) WMAs.
For those interested I hold a weekly livestock webinar on Friday, March 17 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.
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.