Live Cattle
The June Live Cattle contract made another new low for the down move on Wednesday, March 27, 2018. It traded down to 104.50, near the low end of the 104.85 – 104.20 support zone. It rallied off the new low to the high of the day at 106.425, just above resistance (106.025). Once again the rally failed; as it couldn’t trade above the Tuesday high (106.675) and it broke down to the middle of the range and ended the day at 105.50. The 106.025 and 104.85 levels will dictate direction on Thursday, in my opinion. If price trades above 106.025, a rally to 107.30 is possible. Aggressive end of month short-covering could then take price up to 108.95. If price trades below 104.85, a break down to 104.20 and then 103.00 is possible. On Wednesday negotiated cash trade in Kansas was moderate on moderate demand with live sales at 121.00. Trade was slow on light demand in all other major feeding regions. Wednesday afternoon boxed beef cutout values were lower on light to moderate demand and moderate offerings. Choice was down 0.78 at 221.62 with Select down 2.61 to close at 211.63 on 144 loads. The Choice/ Select spread widened to 9.99. The hide and offal value from a typical slaughter steer for today was estimated at 10.11 per cwt live, up 0.04 when compared to Tuesday’s value. Estimated cattle slaughter for today is 118,000, last week 118,000 and a year ago 116,000.
Feeder Cattle
The May Feeder Cattle contract opened at the key level (136.75), dipped to the low (136.525) then worked its way to the high, reaching 139.325 (just above resistance at 138.95), before dipping back below resistance and ending the day at 138.475.A breakout above 138.95 could lead to a test of resistance at 140.775. A break down from here could lead to a test of support at 136.75.
Lean Hogs
The June Lean Hogs contract gap opened lower (72.95), which was just above the 72.875 support level and blasted higher. It never looked back; almost going limit up (76.925 high)and ending the day near the high at 76.625. It blew through resistance at 75.625 and then took out resistance at 76.25, closing above it. A continuation of the rally could lead to a test of resistance at 77.80 and then 78.50. If Hogs are unable to generate enthusiasm to the upside, consolidation of the gains made is possible.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, March 29th 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.