Live Cattle
On Friday July 20, 2018 the August Live Cattle contract traded in a quiet sleepy session as traders waited for cash to trade and the Cattle on Feed report. It made a nominal new high for the up move reaching 109.35 and made a lower low from Thursday’s trading session making an outside day candlestick. It settled at 108.925, in a Doji candle. This is a neutral candle and a breakout above or below the Friday range could give cattle some direction on Monday. The Cattle on Feed report came in at pre-report expectations, so this shouldn’t spark any emotional trade. The report showed cattle on feed as of July 1st at 104%, placements at 101% and marketings at 101%. Pre-report estimates were at 104.3%, 101.3% and 100.8% respectively. Once again, a neutral report. Some cash trades took place after the close and the USDA reports Negotiated cash trade on Friday was limited on moderate demand with a few dressed sales in Iowa from 178.00-180.00. There were also some reports earlier of small sales in Iowa on a live basis at 114. We will see the results of late day trade on Monday. This may spark futures Monday morning. We’ll see. The Friday low (108.275) is below the 108.65 key level, so a breakdown from the low could see support tested at 107.35 and then 106.025. A breakout above the high could lead to a test of resistance at 109.825 and then 110.80. Friday afternoon boxed beef cutout values were steady to weak on light to moderate demand and light offerings. Choice was down 0.32 at 204.17 with Select up 0.08 to close at 197.00 on 98 loads. The choice/ select spread narrowed to 7.17. The hide and offal value from a typical slaughter steer for Thursday was estimated at 9.17 per cwt live, unchanged when compared to Thursday’s value. Estimated cattle slaughter for today is 119,000.
Feeder Cattle
The August Feeder Cattle contract couldn’t trade above the settlement (154.45) price for the prior two trading sessions. It made the Friday high at 154.425 and broke down below the 154.25 key level and the 153.50 support level on its way to the low at 152.975. It recovered a bit and settled at 153.675. A rally above settlement could lead to a test of resistance at 155.275 and then 156.05. A breakdown below 153.50 could see support tested at 152.30. Support then comes in at 151.55 and 150.90.
Lean Hogs
The October Lean Hogs contract continued its trek lower, making a new low for the down move at 50.725. It settled at 51.275. It settled below the key level at 51.80 and a break down from settlement could see price test support at 49.925 and 48.725. A rally from 51,80 could see price test resistance at 53.80.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, July 27th 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.