Live Cattle
On Tuesday May 29, 2018, the August Live Cattle contract opened at102.475, made the session high at 102.675 and then reversed course, trading lower for the remainder of the day, making the low at 100.80. It recovered somewhat and settled at 101.45. This is just below the key level at 101.625. This will be the key to Wednesday’s trade, in my opinion. A rally above 101.625 could test the Tuesday high and then resistance at 103.00. A failure from 101.625 could see price test support at 100.125 and then 99.375. On Tuesday negotiated cash trade was mostly inactive on light demand in all major feeding regions. Tuesday afternoon boxed beef cutout values were steady on Choice and lower on Select on light to moderate demand and moderate to heavy offerings. Choice was up 0.13 at 227.56 with Select down 0.97 to close at 203.65 on 108 loads. The choice/ Select spread widened to 23.91. The hide and offal value from typical fed cattle for today was estimated at 9.58 per cwt live, unchanged from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 120,000.
Feeder Cattle
The August Feeder Cattle contract opened at 145.00, traded to the session high at 145.60, then broke down and traded to the low at 144.05. It settled at 144.975. The high was just above resistance at 145.05 and the low just below support at 144.20. Trading above 145.05 could lead to a test of resistance at 146.20 and then the 200 DMA at 146.675. A breakdown below 144.20 could see support tested at 143.50, 142,425, and then 140.775.
Lean Hogs
The July Lean Hogs contract opened (77.85) above the 77.80 resistance level and surged higher, taking out resistance at 78.425 on its way to a new high for the up move at 79.525. It took out the April 19th high at 79.10 and stopped just short of resistance at 79.775. Hogs then reversed course and took out the open price and traded to the session low at 77.675. A late session rally took price up to 78.975 and it settled nearby at 78.775. Stating above 78.425 could lead to a retest of the Tuesday high and the 79.775 resistance level. Resistance then comes in at 80.30. A breakdown from 78.425 could lead to a retest of the 77.675 low and then support at 76.225.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, June 1st 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.