Live Cattle
The June Live Cattle contract rallied from the open on Wednesday, May 17, 2017, trading to the high of the day at 123.45. The rally came on the better than hoped for fedcattleexchange.com auction as it traded between 133.75 and 135.75. It also traded at 130.00 and 131.00 for 17 to 30 day delivery. There were 2,379 head offered and 1,621 traded. The futures market then made an about face and broke down to the low of the day at 121.75. There wasn’t any cash reported after the auction and futures responded by making the new low. The June contract rallied into the close and the session formed a spinning top candlestick. That is 2 days of small bodied candles which could set up the next directional move. The June contracted ended the session right on trendline support and tomorrow’s trade will see the trendline up at 123.10. A rally off the trendline could see futures test resistance at 124.65 and then 125.75. A failure from here could see a revisit of the Wednesday low and then the Tuesday low at 120.575. The USDA reported some live cash trades at 136 in Nebraska and dressed at 210 to 215 in Iowa and Nebraska.
Feeder Cattle
The August Feeder Cattle contract made an early attempt to rally and it reached the high (149.35) of the day during the first 5 minutes of trading before breaking down and testing trendline support (146.80) at 146.875. Feeders rebounded from here and rallied to 148.775. The market failed from here and broke down to the low of the day at 146.45. It couldn’t stay below the trendline and made another attempt to rally reaching 148.475. It ended the session at 148.05, forming a Doji candlestick, showing indecision in the market. That is 2 days of bouncing off of trendline support and forming 2 small bodied candles in a row. The trendline rises to 147.325 on Thursday and a breakdown from the trendline could see price test support at 144.65 and the 143.325. A rally from the high could see price test resistance at 150.425 and then 151.85.
Lean Hogs
The June Lean Hogs rallied to resistance at 79.90, reaching 79.95 for the high of the day. Lean Hogs couldn’t hold this level and broke down to the low (78.80) of the day. It formed a hanging man candlestick and a breakdown from here could lead to a test of support at 77.90 and then 76.775. A rally off the low could see a retest of the high and then a move towards resistance at 82.30.
For those interested I hold a weekly livestock webinar on Friday, May 19 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.