Live Cattle
On Monday July 9, 2018 the August Live Cattle contract opened at 106.85 and traded to the high at 107.325. This is right at the key level at 107.35. It broke down from here trading to the low at 105.775. This is below the 106.025 support level, but it held and settled above it at 106.125. A bounce off settlement could see the 107.35 resistance level retested. Resistance then comes in at 108.65. A breakdown below the low could see support tested at 104.85 and then 104.20. Support then comes in at 103.00. On Friday, trade was very active on very good demand in all feeding regions. Compared to last week in the Texas Panhandle live purchases traded 5.00 to 5.50 higher from 112.00 to 113.50 with the bulk at 113.00. Compared to the prior week in Kansas live purchases traded 6.00 to 7.00 higher, mostly at 112.00 with a few up to 113.00. In Nebraska when compared to the previous week, live purchases traded 6.00 to 6.50 higher ranging from 112.00-114.00, bulk from 113.50 to 114.00. Dressed purchases traded moved 6.00 to 10.00 higher ranging from 175.00-180.00, bulk at 180.00. In the Western Cornbelt when compared to last week, live purchases traded 4.00 to 5.00 higher from 110.00-113.00, bulk at 112.00. Dressed purchases traded 5.00 to 10.00 higher from 175.00 to 180.00. On Monday negotiated cash trade was at a standstill in all major feeding regions. Monday afternoon beef cutout values were lower on Choice and steady on Select on light to moderate demand and heavy offerings. Choice was down 1.11 at 206.92 with Select down 0.09 to close at 198.62 on 139 loads. The choice/ select spread narrowed to 8.30. The hide and offal value from typical fed cattle for today was estimated at 9.57 per cwt live, up 0.10 from Friday’s value. The estimated cattle slaughter for Monday was reported at 119,000.
Feeder Cattle
The August Feeder Cattle contract opened (152.225) below the 152.30 key level, traded to the session high (152.55) then broke down to the session low at 150.35. This is just below the 150.90 support level. It was able to recover and settle above support at 151.45. Holding above support could lead to a retest of resistance at 152.30. Breaking out above 152.30 could lead to a test of resistance at 153.50. A breakdown below the low could see support tested at 149.975 and then 148.40. Support then comes in at 147.35 and 146.20.
Lean Hogs
The August Lean Hogs contract broke down hard almost going down limit as demand fears build as the trade war takes center stage. With tariffs in place from Mexico and China traders fear exports will collapse. That would mean US consumers would have to buy more pork and with supply increasing as we move into the second half of the year, it could lead to lower prices. The breakdown in futures took price below the 72.875 support level. It traded down to 72.55 and settled at 72.775. A continuation to the downside could see price test support at 71.80 and then 70.125. A rebound could see price consolidate within the Monday range.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, July 12th 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.