On Wednesday, April 11, 2018, the June Live Cattle contract failed to hold onto another early morning rally. The high was reached at 103.375. it continues to follow the 13 DMA (103.18) on its path down. It made the low at 101.20, below the 8 DMA (102.05) and settled below it at 101.575. A breakdown on Thursday below the Wednesday low could see price test support at 99.65. Traders can buy a break down to the middle of last Wednesday’s range (99.85), targeting resistance levels at 101.55, 103.00 and then the resistance zone mentioned above. Place stops according to your account size and risk tolerance. On Wednesday negotiated cash trade in Texas is light on light demand with a few early live sales at 117.00. In Kansas trade is light on light demand with a few early live sales from 117.00-118.00. Trade is slow on light demand in all other feeding regions as producers continue to pass on current bids. The fedcattlexchange.com auction took place with a respectable 3,931 head for sale. Sales took place at 118.00 in Nebraska (232 head), 117.00 (127 head) and 118.00 (91 head) in Kansas for 1 – 9 day delivery. There 59 head sold at 114.00 in Texas for 17 – 30 day delivery. Wednesday afternoon boxed beef cutout values were weak on light to moderate demand and moderate offerings. Choice was down 0.44 at 213.07 with Select down 0.72 to close at 200.61 on 136 loads. The choice/ select spread widened to 12.46. The estimated cattle slaughter on Wednesday was reported at 119,000.
The May Feeder Cattle contract consolidated (137.10 – 134.90) within Tuesdays range (137.65 – 134.325). Trading below the low could see price test support at 133.30 and then 132.00. I would be a buyer of the breakdown towards 132.00, as this would be a retracement towards the middle of the April 4th range (132.175). I would target 133.30, 134.25 and then 135.625. Place stops according to your account size and risk tolerance.
The June Lean Hogs contract consolidated under Tuesdays high (77.00). It opened (74.90) below Tuesdays low and rallied to 76.65, closing near the middle of the range at 75.775. I would be a buyer at the 74.25 support level, looking for a rally towards 77.00. Place your stop according to your account size and risk tolerance.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, April 12 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.* *
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.