The August Live Cattle tested support at the 50 DMA (118.375) on Tuesday, May 30, 2017, trading to the low for the day at 117.95. It found support here, and spent the rest of the day grinding higher, reaching its high (120.10) at the end of the trading session. This is just under resistance at the 8 DMA (120.625). Resistance is also at the 13 DMA (121.70). With futures trading between moving average support and resistance (the 100 DMA is support at 117.375) traders’ expectations for cash will come to the forefront for the week. Cash is expected to remain even with last week’s trade ($131.00 to $133.50) this week so any deviation from expectations could be the catalyst to drive futures prices. Boxed beef cutout values were down $0 .21 to $245.39 for choice and up $1.14 to $219.59 for select. There was light to moderate demand and offerings on 130 loads. The choice/ select spread is at 25.80. Estimated slaughter for Tuesday came in at 117,000, even with last week and above last year’s 113,000.
The August Feeder Cattle contract opened (146.75) lower from Friday’s close (146.95) and traded down to 145.225, just above support (144.65) at the May 11th low. This is just above resistance at 149.975. A rally above this area could see a retest of resistance at the 38.2% retracement level (151.85) of the May 4th high (163.50) to the May 11th low (144.65). Resistance is at the 50% retracement level (154.075) and then 155.10. Support is at 149.975 and the May 11th low.
The July Lean Hogs couldn’t reach the 82.30 resistance level. It opened (81.90) at Friday’s settlement price and grinded lower the remainder of the day, making its low at 80.775. This is just above support at 80.45. A breakdown from here could see a test of support at the 8 DMA (80.25) and then the 13 DMA (79.375). If the market rallies above the high then a test of resistance at 82.30 is possible.
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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.