Live Cattle
On Tuesday June 5, 2018 the August Live Cattle contract opened at 102.80 and traded to the session low at 102.20. It was able to rally off the low as the June contract led the way higher for the cattle market, rallying all day long and almost going up limit. The June contact is expiring at the end of the month and with cash trading last week at 111.00, the futures contract has started to converge towards the cash price. If this continues cash could trade higher and futures could follow, Traders could also be wondering when this wall of cattle will show up. Show lists haven’t been increasing and producers have sold a lot of cattle forward keeping the market current. The choice grading percentage has declined and packers need to fill customer orders. They are still making good money as cutout prices remain high. August cattle rallied to the high at 104.65 and settled at 104.65. It formed an outside day candle. Trading above the high could see resistance at 104.85 and 105.20 tested and then 106.025. A failure from settlement could see price consolidate within the Wednesday range. On Tuesday negotiated cash trade was at a standstill in all major feeding regions. Tuesday afternoon boxed beef cutout values were steady on Choice and weak on Select on light to moderate demand and offerings. Choice was up 0.01 at 227.58 with Select down 0.40 to close at 205.85 on 144 loads. The hide and offal value from typical fed cattle for today was estimated at 9.56 per cwt live, up 0.02 from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 121,000.
Feeder Cattle
The August Feeder Cattle contract opened at 145.325, traded down through the 145.05 support level and made the session low at 144.325. This is just above support at 144.20. It held is ground and rallied, trading up to the high (146.95) by mid-session. Feeders then consolidated, trading between 145.85 low to 146.70 high for the rest of the day. It settled at 146.125. It formed an outside candlestick. Trading above the high could see 147.35 tested and then 148.40. Resistance then comes in at 149.975. Trading below settlement could see price retest support at 145.05 and then 144.20.
Lean Hogs
The July Lean Hogs contract opened lower at 76.525 and traded down to the session low at 75.20. Trade fears wounded Hogs as worries about Mexico placing tariffs on Hog purchases sent prices down. The selloff took price below support at 75.625, but it was short lived. Price recovered, rallying to the session high at the end of the day, reaching 77.175. It settled at 77.025. If the recovery off the low continues, Hogs could test resistance at 77.80, 78.425 and then 79.775. A failure from settlement could lead to a re-test of support at 76.225 and then 75.625.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, June 7th 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.