Live Cattle
On Wednesday July 11, 2018 the August Live Cattle contract continued its descent, trading down past the 103.00 support level on its way to the session low at 102.70. It recovered off the low and settled at 103.85. If cattle can recover from settlement a test of the 104.20 – 104.85 resistance zone is possible. Resistance then comes in at 106.025. A breakdown below the low could see support tested at 101.625. Negotiated cash trade on Wednesday was mostly inactive on light demand in all major feeding regions. Wednesday afternoon boxed beef cutout values were steady on Choice and lower on Select on light to moderate demand and offerings. Choice was up 0.12 at 207.44 with Select down 1.25 to close at 197.14 on 144 loads. The choice/ select spread widened to 10.30. The hide and offal value from a typical slaughter steer for today was estimated at 9.46 per cwt live, down 0.03 when compared to Tuesday’s value. Estimated cattle slaughter for today is 120,000.
Feeder Cattle
The August Feeder Cattle contract broke down hard, slicing through support levels like a tender steak. It finally stopped at 147.825, just above support at 147.35. That is 4 handles below the Tuesday settlement price, ugly. It was able to bounce back somewhat off its low trading up to 149.875 and settling at 149.40. If this was a temporary pullback, a rally above 149.975 could see price try to reclaim the 150.75 high from June 20. Resistance then comes in at 151.55. A breakdown below 148.40 could see support tested at 147.35 and then 146.20.
Lean Hogs
The August Lean Hogs contract spent most of the trading session consolidating between 70.475 and 68.95. The last 10 minutes of trading, however took price from the middle of the trading range (69.50) to a new low for the day at 68.525. It settled at 68.80. This is below the 68.75 support level. The August contract actually followed the further back month contracts (December on down) down as they were crushed at the end of the day almost going limit down on expanded limits. This keeps the pressure on the August contract and we could see price test support at 67.775. Support then comes in at 66.75 – 66.425. If support holds, consolidation within the Wednesday range is likely.
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.