Live Cattle
On Friday May 11th, 2018, the June Live Cattle contract continued to consolidate between the April 30th high (107.825) and the May 1st low (103.825). The Thursday new high (108.10) did little to help cattle break away from the consolidation band. It opened (107.85) below the Thursday high and up ticked to the session high (108.05), also below the Thursday high and then it collapsed to the low of the day at 106.15. This is near the 106.025 support level. It recovered and rallied for the remainder of the day, peaking at 107.875, and settling at 107.625. It ended the week above the 107.35 key level. Resistance is at 108.65 and the declining 50 DMA now at 108.85. A breakout above here could see price gravitate towards resistance at 110.80. Failure from the Friday here could take price down to support. Negotiated cash trade on Friday has been limited so far. Friday afternoon boxed beef cutout values are steady to weak on light to moderate demand and offerings. Choice was down 0.10 at 230.97 with Select 0.45 lower to close at 208.69 with a spread of 22.28 on 105 loads. The estimated cattle slaughter for Friday was reported at 118,000.
Feeder Cattle
The August Feeder Cattle contract opened (144.00) above the 100 DMA (143.475), up ticked to the session high at 144.20 and broke down below the 100 DMA, trading to the session low at 142.575, just above support at 142.425. It recovered and rallied off the low, trading up to 144.175, just below the high and it settled nearby at 143.90. It is now trading in a new consolidation band (144.80 High – 141.15 low). It did close above the 100 DMA for the second day in a row and this should be the key level for Monday’s trade. A rally off the 100 DMA could see price break free from this band and test resistance at 145.05 and then 146.20. The 200 DMA looms nearby at 147.00. A failure from the 100 DMA could see price retest the lower end of the range. Support then comes in at 140.775 and then 138.95.
Lean Hogs
The June Lean Hogs contract opened at 77.35, made a new high at 77.475 and tanked. It crashed thru support (76.225 and 75.60) and traded to the low at 74.90. It settled nearby at 75.10. The break down eliminated 3 days of gains as it closed within the 75.60 to 72.20 consolidation band. A break down below 74.125 support could test the lower end of the band. A recovery off the 74.90 low could see price consolidate within the Friday range.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 17th 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.