On Tuesday May 15th, 2018, the June Live Cattle contract gap opened (104.525) lower, up ticked to the high (104.575) and collapsed, trading through support (104.20, 103.00) and made the low at 102.225. It bounced off the low and traded in a range (103.825 – 102.825) the remainder of the day. It settled at 102.975. It settled at the 103.00 key level and this should be our key level for Wednesday’s trade. A break down below 103.00 could lead to a test of support at 101.625. Support then comes in at 100.125. A rally above 103.00 could see price test resistance at 104.20. Tuesday negotiated cash trade in Kansas is light on light demand with a few early live sales at 117.00. Trade is slow in all other major feeding regions as producers continue to pass on current bids. Tuesday afternoon boxed beef cutout values are weak on choice and firm on select on light to moderate demand and moderate to heavy offerings. Choice was down 0.48 at 231.64 with Select up 0.39 to close at 209.51 with a spread of 22.13 on 145 loads. The estimated cattle slaughter for Tuesday was reported at 119,000.
The August Feeder Cattle contract opened (140.25) below support (140.775, 50 DMA (140.80), trendline (140.675)) and broke down, trading down to the session low at 137.80. It settled at 138.45, below the 138.925 support level and leaves open the possibility for a continuation down to 136.825. Support then comes in at 135.60.A bounce of the Tuesday low could see price consolidate within the Tuesday range.
The June Lean Hogs contract opened (76,225) at resistance, traded to the high at 76.30 and fell. It took out support at 75.625 and traded down to the low at 74.075. This is just below the 74.125 support level. It was able to hang on at support and it settled above it at 74.725. Follow through to the downside could see the 50 DMA (73.575) and the 72.80 support levels tested. The 100 DMA is next at 72.425. If support holds at the 74,125 level, price could consolidate within the Tuesday 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.* *
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.