June Lean Hogs gap opened lower and with expanded limits (4.5) in place, nearly went down limit. It dropped to a new low at 85.375 before doing an about face and rallying to the session high at 91.35. Yep, that’s right a 6 handle rally to the high. The Wild Wild West has nothing on the Hog market. That’s not the end of the day however. Of course the rally couldn’t be sustained and Hogs fell and settled below yesterdays’ lone traded price (89.75) at 89.25. I expect the fireworks show to continue as various news reports come out about trade talks with China. Hogs are back to normal limits on Wednesday. Positive news on the trade front could see a limit move to the upside. Negative news could see a limit move down. No news could see price react violently to any perceived notions on trade. Be fast and pay close attention to the price action.
June Live Cattle hung out in the lower part of yesterday’s trading range forming an inside candlestick. It settled unchanged on the day at 112.275 in a Doji candlestick. A rally above the112.925 could lead to some short-covering and price could test resistance at 113.90 and then 114.65. A failure from the 111.975 low could see price test support at 110.80. Support then comes in at 108.65. Cash market was open for trade today as sales were made on a live basis in Kansas at 120.00. This is lower than last week’s trade. Boxed beef prices also aren’t being helpful as choice cutouts dropped 3.13 to 223.87 and select fell 2.13 to 211.83 on light to moderate demand and moderate to heavy offerings. He load count was 168. The choice/ select narrowed to 12.04. Slaughter came in at 121,000.
August Feeder Cattle traded in the upper part of yesterday’s range and settled at 145.60. A rally above the 146.45 high could see price retest the 100 DMA at 147.06. If shorts panic and price breaks out above the 100 DMA a test of resistance at 148.40 is possible. If settlement fails, a test of support at 144.20 and then 143.50 is possible.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 9th 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.