Live Cattle
The August Live Cattle opened (121.975) higher on Thursday, June 1, 2017, and proceeded to trade past resistance levels on its way to a limit up move in the futures contract. Spurred by aggressive cash bids early in the trading session, the futures market took out resistance at the 122.775 level and then the 21 DMA (123.625) fell. Early $135 bids in Kansas and $215.00 dressed sales in Nebraska began the onslaught in the futures market. Bids and trades move higher in the cash market ($136.00 bids and sales. $216.00 Dressed bids and sales) and the rout was on. Cash traded between $135.00 and $137.50 live and $215.00 and $216.00 dressed. Saw some $217.00 bids, but I didn’t see it posted as traded on the report. The futures market settled limit up and we will have expanded limits (4.50) on Friday. Boxed beef cutout values were up $0.04 to $245.58 for choice and down $0.96 to $217.22 for select. There was moderate demand and heavy offerings on 188 loads. The choice/ select spread is at 28.36. Estimated slaughter for Thursday came in at 117,000, more than last week’s 115,000 and above last year’s 111,000. August Live Cattle ended the session (124.70) above the 8 DMA (121.30), the 13 DMA (121.45) and now the 21 DMA (123.625). Continued strength could see resistance tested at 126.025, 126.875 and then 127.45. Support is at the short –term moving averages and 120.10.
Feeder Cattle
The August Feeder Cattle contract opened (153.075) higher and it also raced to a limit up (157.075) move. It settled up limit and will also have expanded limits (6.75) on Friday. It is also above the 61.8% retracement level (156.29) of the May 4th high (163.50) to the May 11th low (144.65). If Feeder Cattle can remain above this level on Friday, a test of resistance at 158.80 and 159.70 is possible. The May 4th high is also in play on Friday with the expanded limits. Support is at the 61.8% retracement level (156.29), then 155.10 and the 50% retracement level (154.075).The 38.2% retracement level (151.85) and then 149.975 is next.
Lean Hogs
The July Lean Hogs took a breather on Thursday, even though it made a new high (83.525) for the up move. Resistance at 83.80 held and Hogs saw some profit taking at these lofty levels. It broke down below and ended the session below the 82.375 support level. It traded down to 81.675 and ended the session at 82.075. A breakdown from here could see a test of support at the 8 DMA (81.00) and then support at 80.45. The 13 DMA is nearby at 80.15. Lean Hogs could see some more profit taking as the Hog market has had a nice run to the upside.
For those interested I hold a weekly livestock webinar on Friday, June 2 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.
**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.