Live Cattle
On Monday April 23, 2018, the June Live Cattle contract gap opened (104.55) higher from the Friday high (104.00) and traded up to the high of the day at 105.475. It faded from here and closed some of the gap, trading to the session low at 104.30. It consolidated the remainder of the day and settled at 104.875. The close is in the lower half of the range and continued weakness could see the gap close on Tuesday. If support is found on the gap close, a rally to test the Monday high could follow. Futures are still pretty much battling to break out of the 104.20 – 104.85 resistance zone and for the rally to continue higher, it must break free from here and then take out the 106.025 resistance level. Doing so would lead price to test resistance 108.65 then 110.80, in my opinion. A failure from 104.00 could see price test support at 103.00 and then 101.625. On Monday negotiated cash trade was at a standstill in all major feeding regions. Monday afternoon beef cutout values were higher on moderate demand and moderate to heavy offerings. Choice was up 3.13 at 215.11 with Select up 1.59 to close at 201.72 on 114 loads. The choice/ select spread widened to 13.39. The hide and offal value from typical fed cattle for today was estimated at 9.79 per cwt live, unchanged from Friday’s value. The estimated cattle slaughter for Monday was reported at 117,000.
Feeder Cattle
The August Feeder Cattle contract is the lead contract as the volume has surpassed the May contract. It gap opened ((145.30) higher from the Friday high (144.775) and took off. It traded up to resistance at the 200 DMA (147.375), making the high at 147.45. It settled nearby at 147.125. A breakout above the high could see price test resistance at 149.975. A failure from the high could see price revisit the low (145.175) and support at 145.05. It could then close the gap from the Friday high.
Lean Hogs
The June Lean Hogs contract continued its breakdown after peaking at 79.10. It traded down to support at 76.225, making the low just below it at 76.10. It settled just above support at 76.375. A continued sell-off could send price down to support at 75.60 and then 74.80. If the low holds, a test of resistance at 77.80 is possible.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, April 26 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.