Live Cattle
On Wednesday May 9th, 2018, the June Live Cattle contract continued to consolidate between the April 30th high (107.825) and the May 1st low (103.825). The Wednesday trade took place with a high of 107.10 and the low at 105.35. It settled near the low at 105.675. It started the day strong, trading above the Tuesday high (106.925), getting above 107.00 and looking poised to breakout above the 107.35 resistance level, but it couldn’t be sustained. The rally attempt failed and price limped its way lower in a quiet trading session. It stopped short of support at the 104.85 – 104.20 zone and this area remains key support. A break out above resistance at 107.35 could see price test the April 30th high and then resistance at 108.65. Trading below the Tuesday low could send price back to test support at 104.20 and then 103.00. Support then comes in at 101.625. Negotiated cash trade on Wednesday has been mostly inactive on light demand in all feeding regions. Wednesday afternoon boxed beef cutout values are steady on Choice and lower on Select on light to moderate demand and offerings. Choice was up 0.03 at 230.96 with Select 0.98 lower to close at 208.95 with a spread of 22.01 on 137 loads. The hide and offal value from a typical slaughter steer for today was estimated at 9.89 per cwt live, up 0.03 when compared to Tuesday’s value. The estimated cattle slaughter for Wednesday was reported at 118,000.
Feeder Cattle
The August Feeder Cattle contract tried to rally early in the trading session, breaking above the Tuesday high and moving towards resistance at 145.05. It failed to challenge resistance however, making the session high at 144.80 and then once again taking out support at the 100 DMA (143.50), and then the 21 DMA (143.475). It challenged the 142.425 support level, trading to the low at 142.20 and then settling above it at 142.70. The close below the 100 and 21 DMAs is potentially bearish for Feeder Cattle. A breakdown below the 142.425 support level could see price test the 50 DMA (141.175) and trendline support at 141.15. Support then comes in at 140.775. A bounce above the 142.425 support level could see price revisit the 21 and 100 DMAs. The Wednesday high and 145.05 is the next area for resistance.
Lean Hogs
The June Lean Hogs contract gap opened higher (76.625) and raced to the session high at 77.25.This is below the 77.80 resistance level and the unsuccessful approach led to a reversal that closed the gap and took price down to the 75.60 support level, making the low just above it at 75.825. A recovery rally took price to just above (76.725) the open and then a dip saw it settle at 76.575. It formed a Doji candlestick. A break below 75.60 could see price move towards support at 74.125. A recovery above settlement could see price revisit the Wednesday high and then resistance.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 10th 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.