Live Cattle
The stampede continues. The June Live Cattle contract made another new high for the move on Wednesday, May 3, 2017, trading up to 130.05, going limit up for the session. The limit will be expanded to 4.50 on Thursday for the Live Cattle markets. Cash continues to drive futures higher as the fedcattleexchange auction started the frenzy in the morning with sales of 547 head out of the 1745 offered. They traded at the cash lows of the day with an average of $140.15. They were sold in Texas. Nebraska’s 142.00 minimum bids were ignored. Big mistake. Trades outside the auction started as aggressive $142.00 – $143.00 bids were rejected, forcing packers to bid $145.00 and higher. The winter storm (up to 20 inches of snow) over the weekend in Western Kansas had buyers worried about the ability to move cattle out of the affected areas. Kansas and Texas saw trades from $145.00 to $146.00. Nebraska had sales of $145.00 to $147.00 live and $230.00 to $232.00 dressed. Colorado had sales at $147.00. There were reports of $148.00 in Iowa. Iowa confirmed sales at $145.00. With futures prices under cash by $15 to $18 (normally $7 under at this time of year) and expanded limits for Thursday there could be more upside for the June contract. Live Cattle has had an aggressive move higher since making its low on April 5th at 108.675, at some point there will be profit taking. Watch out below! Boxed beef cutout values were strong today as Choice was up $3.14 to $232.59 and Select up $1.61 to $214.89. Choice/ Select spread at $17.70. Slaughter for Wednesday is estimated at 114,000.
Feeder Cattle
The August Feeder Cattle also had a limit up move. Feeder Cattle will also have expanded limits. The limit will go from 4.50 to 6.75 on Thursday. As long as the Live Cattle remain strong, I believe it would be difficult to see Feeders breakdown.
Lean Hogs
The June Lean Hogs grinded higher after breaking out above the 3 day consolidation between 74.475 and 72.825. Resistance is at 77.90 and then 80.00. Support at 74.475 and 72.875.
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.