Live Cattle
On Monday June 25, 2018 the August Live Cattle contract gap opened lower at 104.45, traded to the high at 104.90 then collapsed, as the weight of lower cash prices on Friday and the higher placements from the Cattle on Feed report put pressure on futures. The trade situation isn’t helping cattle also. While cattle shouldn’t be affected directly (China isn’t a major purchaser of US beef), uncertainty, hog tariffs and a weaker equity market could reduce demand for beef. Cattle went down limit and despite attempts to move off limit it settled down limit (102.90). This Is right at the 103.00 support level and an open below here could see price test support at 101.625. Trendline support is at 101.225and the June 15 low is at 100.40. Support then comes in at 100.275. A recovery off of 103.00 could see price consolidate WITHIN THE Monday range. On Monday negotiated cash trade was at a standstill in all major feeding regions. Monday afternoon beef cutout values were steady to firm on moderate demand and offerings. Choice was up 0.53 at 217.69 with Select down 0.13 to close at 201.89 on 103 loads. The choice/ select spread widened to 15.80. The hide and offal value from typical fed cattle for today was estimated at 9.67 per cwt live, unchanged from Friday’s value. The estimated cattle slaughter for Monday was reported at 119,000.
Feeder Cattle
The August Feeder Cattle contract gap opened lower at 147.575, traded to the high at 147.925 and closed the gap at 147.875 (Friday low), then crashed, trading down to support at 145.05 making the low at 145.125. It settled at 145.775. A break down below the low could see price test support at 144.20 and then the 100 DMA (143.625). Support then comes in at 143.50 and 142.40. A recovery could see price consolidate within the Monday range.
Lean Hogs
The August Lean Hogs contract opened at the session high (75.00), traded down to the low at 73.275 and settled at 73.60. It closed below support at the 100 DMA (73.975) and the 100DMA could be key to trade on Tuesday, in my opinion. A recovery off the 100 DMA could see price test resistance at 74125 and then test the Monday high. Resistance then comes in at 75.625. A continuation lower could see price test support at 72.875 and then 71.80.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, June 28th 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.