Live Cattle
On Tuesday May 1st, 2018, the June Live Cattle contract broke down below support at 104.20, trading to the session low at 103.825. With the 21 DMA also providing support at 104.025, and trendline support at 104.325, the spike down was bought and price rallied the rest of the session. It rallied past the early high and stopped at 106.40. It dipped lower from here and ended the day at 105.725. It formed a hammer candlestick. It is right at the key 106.025 level. A break out above the 106.40 high could see price test the Monday high at 107.825. Resistance then comes in at 108.65. A failure from 106.025 could send price back to test support and the Tuesday low. On Tuesday negotiated cash trade was very limited on light demand in all major feeding regions. Tuesday afternoon boxed beef cutout values were sharply higher on moderate to good demand and light to moderate offerings. Choice was up 2.01 at 226.43 with Select up 2.30 to close at 207.09 on 109 loads. The choice/ select spread narrowed to 19.34. The hide and offal value from typical fed cattle for today was estimated at 9.67 per cwt live, unchanged from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 118,000.
Feeder Cattle
It was an ugly day for the August Feeder Cattle contract, breaking down from the open (146.65) (also high of day) and falling to the session low at 143.275. It crashed through support at 146.20, then 145.05 and then major trendline support at 144.75, then 144.25 and the 100 DMA at 143.575 and finally support at 143.50. Ugly! It ended the day at 143.425, blow support. Ugly! If Feeder Cattle can’t find buyers on Wednesday, we could see further deterioration in price to 142.425 then the 50 DMA (141.55), and then140.775. Ugly! If the low holds then a retracement within the Tuesday range is likely.
Lean Hogs
The June Lean Hogs contract tested support at 72.875, making the session low just above it at 92.975 and rallying to resistance at 74.325 making the high just below it at 74.275. It resulted in a morning star candle formation and could lead to higher prices. If the 74.325 level is bested on Wednesday, a rally up to resistance at 75.60 is possible. An inability to take advantage of the candlestick formation could see price consolidate within the Tuesday range.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 3rd 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.