The April Live Cattle contract opened higher (124.25) on Tuesday, February 27, 2018. It attempted an early rally, trading past resistance (124.70, 125.50), reaching the session high at 125.675. It broke down from here and traded to the low of the day (124.15). It ended the session at 124.20, creating a Gravestone Doji candlestick. After testing resistance levels and failing to end the day near these levels, the Doji formation could signal trouble for Live Cattle. A break down below the session low could test the Monday low (123.55). Support then comes in at 123.125. Breaking down below here could put the February 6th low (122.80) in the crosshairs. Breaking below 122.80 could be the first sign of the uptrend weakening. A rally from the Tuesday low could lead to a retest of resistance at 124.70 and 125.50. The down sloping 8 DMA is at 125.90. The negotiated cash trade was mostly inactive on light demand in all major feeding regions. Tuesday afternoon boxed beef cutout values were higher on Choice and Select on light to moderate demand and moderate offerings. Choice was up 1.00 to 220.52 and Select was up 0.07 to 214.79 on 119 loads. The choice/ select spread widened to 5.73. The estimated cattle slaughter for Tuesday was reported at 117,000.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, March 1st 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.
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Senior Market Strategist
Walsh Trading, Inc.
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.