In another volatile trading session June Lean Hogs opened lower and rallied to the high of the day at 92.80. It wasn’t able to take out yesterday’s high at 92.825 and sellers took over and drove price down hard past support at 90.45 on its way to the low at 89.65. Bulls came back in the market and price rebounded, stopping just short of the high of the day and settled right at the 92.375 resistance level. It is the highest close since May 3rd as it closed the gap from the low (91.975) on that day to the May 7th high. Continued strength could see the 93.50 resistance level tested. Resistance then comes in at 95.30. An inability to rally past 92.375 could see price revisit support at 9045. The Lean Hog index continues to firm reaching 84.21 as of May 15th and the pork cutout index remains strong and it is now at 87.15 as of May 16th.
June Live Cattle rallied right from the start of the trading session. It opened above yesterday’s settlement price and raced to the session high at 112.50. It couldn’t handle the rally and grinded lower making the session low at 110.625. It recovered and settled at 111.275. The high and the low both poked through key levels at 112.35 for resistance and 110.80 for support and rejected both levels. A weak open on Monday could see price test support at 108.65. Support then comes in at 107.30. Another attempt to recover could see price retest resistance at 112.35. The cash market traded lightly today at 115.00 and 117.00 on a live basis and 185.00 – 186.00 for dressed. Boxed beef cutouts rebounded today with choice cutouts up 0.75 to 220.31 and select up 0.40 to 208.28 on moderate to fairly good demand and moderate offerings. The choice/ select spread widened to 12.03 and the load count was 109. Slaughter slowed to 117,000 on Friday and Saturday slaughter is estimated at 59,000 bringing estimated slaughter to 660,000 for the week. This is lower than last week’s 671,000 and last year’s 668,000.
August Feeder Cattle has rallied aggressively since making the low for the down move on Thursday. The low is at 140.50 just below the 140.775 support level. Today’s rally took price up to resistance at 146.20 with the high for the session just below it at 146.05.It settled at 145.50. Continued strength could see price test the resistance area at the 100 DMA (146.95) and 147.30. Resistance then comes in at 148.40 and the 200 DMA at 148.69. A pullback from settlement has the potential of revisiting support levels 144.20 and 143.50. The Feeder Cattle Index continues to move lower as it came in at 132.76 as of May 16th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, May 23rd 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.