The hog and cattle markets spent the trading session spinning their wheels in a quiet trading session. The June Lean Hogs opened at its high (96.225), traded to its low (94.20), all in the first 15 minutes of trading and then chopped within the range for the rest of the day. It settled at 95.325.
This was the second day in a row of consolidating within the upper part of the Friday range. Hogs are somewhat extended and the market is taking a break and looking for more information before profit taking or a continuation of the rally ensues. The Lean Hog index has been strong but remains at an extreme discount to the futures market. The Chinese spot market has so far stabilized and is down a little over 1% for the week. Futures prices have stalled just below the 61.8% retracement of the all-time high at 133.425 and the low at 40.70. That resistance level is at 98.00. It would take a close above here to excite the bulls and get this market moving higher. Support is at 93.50 and then 92.375.
June Live Cattle spent the session testing the 120.75 support level and bouncing with the high being made at 121.475. The low was made at the end of the session at 120.55 as the constant beating of support finally gave way and it settled just below support at 120.725. A weak open could see price test support at 119.15. A rebound from 120.75 could see price revisit the Tuesday high and then resistance at 121.825.
The negotiated cash market is quiet and trade probably won’t take place until the end of the week unless futures fall hard and producers panic and take low ball bids from packers. Boxed beef cutout values remain strong with choice up 0.51 to 229.51 and select up 0.26 to 218.99. There were 120 loads on light to moderate demand and offerings. The choice/ select spread widened to 10.52. Slaughter is estimated to be 119,000.
May Feeder Cattle also pressured support bouncing off the 149.975 most of the session before trading to a new low at the end of the day at 149.40 and settling below support at 149.80. If support breaks on Wednesday a test of the 200 DMA at 148.78 is possible. This could be a buying opportunity for those bullish. Resistance is at 151.55 and then 152.30.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, March 28th 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.