Live Cattle
On Tuesday May 22, 2018, the August Live Cattle contract opened (101.00) near the high (101.10), and then traded to the low of the day at 100.05. It spent the rest of the trying to get back to the high. It couldn’t quite make it, getting to 100.925 at the end of the session. It settled at 100.65. It formed an inside candle and had the smallest range for the past 4 sessions. A breakout above the high could see price test resistance at 101.625 and then 103.00. A failure from settlement could see price retest the Monday low and then support at 99.375. Support then comes in at the Friday low at 98.10. On Tuesday negotiated cash trade was at a standstill in all major feeding regions. Tuesday afternoon boxed beef cutout values were lower on light to moderate demand and moderate offerings. Choice was down 1.47 at 229.35 with Select down 1.66 to close at 205.86 on 129 loads. The choice/ select spread widened to 23.49. The hide and offal value from typical fed cattle for today was estimated at 9.46 per cwt live, unchanged from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 119,000.
Feeder Cattle
The August Feeder Cattle contract opened at 140.70, traded to the session high at 141.10, then fell to the low at 139.725. This decline tested trendline support at 139.875 and the declining 8 DMA (139.75). It recovered from here and it also tried to reclaim the high, reaching 141.00. It settled at 140.725, below the 140.775 resistance level. It formed an inside candle and had its smallest range in the past 4 sessions. Trading above the high will face resistance at the downward sloping trendline at 141.575 and the 13 DMA at 141.40. Getting above these levels could push price up to resistance at 142.425. The 100 DMA then provide resistance at 143.20. A failure from 140.775 could see price revisit the 138.95 support level.
Lean Hogs
The June Lean Hogs contract opened at 73.375 broke down to the session low at 72.55, testing support at 72.875 and 72.675 (100 DMA). Support was firm and price rallied to the high at 73.575. It consolidated the remainder of the day and settled at 73.125. It formed a hammer candlestick with a small shadow above the open. A breakout above the high could see price test resistance at the 50 DMA (74.275), 21 DMA (74.70) and the Trendline at 75.10. A failure at settlement could see price revisit support. A breakdown below support could see the 71.80 support level tested.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 24th 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.