Live Cattle
The June Live Cattle contract made another new high for the move on Monday, May 1, 2017, trading up to 125.325 before breaking down and trading to the low of the day at 123.65. A late day rally took price above 124.00 and it ended the session at 124.30. It settled at 124.125. Today’s trade formed a Spinning Top Candle, a bearish indication especially with the strong rally in Live Cattle. If the June Live Cattle trades below the Monday low on Tuesday, we may see a pullback to support at 122.425 and then 121.45. If the bearish candle fails to contain the bullish sentiment and we take out the Monday high, a test of resistance at 125.90 and then 127.15 is possible. Boxed beef cutout values were higher as Choice was up $4.49 to $226.27 and Select was up $1.77 to $209.45. The estimated slaughter for Monday is 107,000.
Feeder Cattle
The August Feeder Cattle also had an early rally that failed. It traded up to 156.50, just above resistance at 156.025 before dropping to the low of the day at 152.675. It staged a late day rally and ended the session at 153.925. It settled at 153.75. A bearish spinning top candle formed and could lead to a test of support. A breakdown from the low could lead to a test of support at 151.025 and then the August 2016 high at 149.975. A continuation higher on Tuesday could see a retest of resistance at 156.025 and then 159.70.
Lean Hogs
The June Lean Hogs consolidated around the 74.10 resistance level, reaching 74.30 and the 72.875 support level, trading down to a low just above it at 73.025. This is the second day in a row in this range. A breakdown from the 72.875 support level could lead to a test of support at the 8 (71.125), 13 (71.325), 21 (71.975) and 50 DMAs ( 70.875) and then 70.00. A rally above the high could see a test of resistance at 75.325 and 77.90.
For those interested I hold a weekly livestock webinar on Friday, May 5 at 3:00pm. 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.
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.