The July Lean Hogs contract took a break today, consolidating within the Tuesday range. The range is the smallest in the past four days and a spinning top candlestick was formed indicating indecision and the potential for a breakout move. The 83.325 support level held again with the low coming in at 83.425. If it fails look for price to test the 80.45 to 79 .80 support area. The 8 DMA (85.09) contained the buying with the high just below it at 84.95. A break out above the 8 DMA could see a retest of resistance at 85.375 and the declining 13 DMA now at 85.865 is possible. Resistance then comes in at 87.06. The Lean Hog Index declined and is at 79.95 as of June 7th and the pork cutout index declined to 84.21 as of June 10th.
August Live Cattle was unable to take advantage of another new high for the fledging up move. It made the high at 107.175 which is just above the declining 21 DMA now at 106.819. It broke down hard from here and traded to the session low at 104.30. This is in the low end of the 104.85 – 104.20 support area. It settled at 105.20. Continued weakness could see price test support at 103.00. A recovery could see price revisit the declining 21 DMA and then resistance at 107.30. The cash market was traded lightly today as the fedcattleexchange.com auction traded live cattle at 113.00. Volume was light and cattle traded on a dressed basis at 186.00. Boxed beef cutouts were lower as choice cutouts were down 0.24 to 222.15 and select was down 1.52 to 206.73 on light to moderate demand and moderate offerings. The choice/ select spread widened to 15.42 and the load count was 136. Slaughter was 121,000.
August Feeder Cattle had two trading sessions today as the early session broke down hard from the open and traded down to the 134.25 support level making the low just above it at 134.525. The sellers went home for the day, and the new slate of traders came in and bid price up taking out the early morning high and made a new high for the day at 138.775. It settled at 137.80. Combining the two seemingly separate sessions saw a long buying tail come in off the lows. This resulted in a hammer candlestick. A rally above the high could see price test the declining 21 DMA for the third time now at 140.39. Pushing past the 21 DMA could take price up to resistance at 142.40. A failure from settlement could see price revisit support at 134.25. The Feeder Cattle Index moved higher to 133.29 as of June 11th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, June 13th 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.