Live Cattle
The August Live Cattle contract opened (120.45) higher on Thursday, May 25, 2017, and then traded down to the lows for the day at 119.375. It found support here, just above the Wednesday low (118.65) and took off trading to a new high (121.50) at the end of the trading session. The rally took price to the 121.45 resistance level and this will be a critical level for Friday. The strong close could lead to continued upside action for the Friday open. A reaction higher from the 121.45 level could see price trade up to the 13 DMA (122.575) and then 123.30. The 21 DMA is at 124.10. A breakdown from the 121.45 level could see a test of the Thursday low and then the Wednesday low at 118.65. Boxed beef cutout values were mixed with choice cutout up .03 to $246.11 and select down $.62 to 218.98 on 111 loads. The choice/ select spread is at $27.13. Estimated slaughter for Thursday came in at 115,000 head, up from 107,000 a week ago and last year’s 112,000.
Feeder Cattle
The August Feeder Cattle contract opened higher (149.00) and dipped down to the low of the day (147.875). It found support here, just above the Wednesday low (147.125). It consolidated in a tight range for the next hour and a half, and then broke out to the upside and by the end of the trading session it nearly closed the gap from the Wednesday high at 151.025 and the Tuesday low at 151.275, reaching the high at 151.25. A rally above 151.275 could see a test of the 38.2% retracement level (May 4th high (163.50) to the May 11th low (144.65)) at 151.85. Tomorrow we get the Cattle on feed report during trading hours (at 11am), because of the upcoming Memorial Day Holiday, so we could see some volatility. Resistance is at the 50% retracement level (154.075) and then 155.10. Support is at 149.975 and the Thursday low.
Lean Hogs
The July Lean Hogs continues to trade around the 80.45 resistance level. It opened (79.675) near the Wednesday low (79.625) and dipped down to a low at 79.20, just below support at the 8 DMA (79.625). It rallied off the low and reached 80.675, just below the Wednesday high (80.85). It ended the session at 80.45, right at resistance. Not much has changed in the price action. Wednesday’s bearish engulfing candle is still active. A breakdown from today’s low could lead to a test of support at the 13 DMA (78.775) and 77.90. If the market rallies above the high then a move towards resistance at 82.30 is possible.
For those interested I hold a weekly livestock webinar on Friday, May 26 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.
**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.