Live Cattle
The August Live Cattle continued its trek higher on Monday, June 5, 2017, making a new high (127.15) for the move and testing resistance at the 127.45 level. Anticipation of higher cash prices this week is the driving force of the futures trade. Last week’s unexpected bidding war for fed cattle (prices traded from $131.00 up to $137.50 for live cattle; $208.00 to $217.00 for dressed) fed a surging futures market and has traders anticipating more of the same for this week’s trade. Early strength in boxed beef cutout values could be an early indication for aggressive packer bids this week. With profit margins remaining strong, expectations for another strong slaughter week (slaughter expected at 630,000) and weights low in a high demand period could lead to aggressive bidding for cattle this week. With choice cutouts up $2.18 to $247.42 and select up $1.82 to $219.88 this morning, it has traders looking for a retest of the recent cutout high (249.88). August Live Cattle ended the session (126.875) above the moving averages and a push above the 127.45 resistance level could lead to a test of resistance at 128.025 and then 129.625. Support is at 125.725, 124.70 and 123.525.
Feeder Cattle
The August Feeder Cattle contract rallied past the 159.70 resistance level, reaching a high of 160.725 and ending the session near the high at 160.575. A continuation past the Monday high could lead to a test of resistance at 161.825 and then the May 4th high at 163.50. Support is at 159.70 and 158.80.
Lean Hogs
The July Lean Hogs broke down (session high at 82.475) from the 82.375 resistance level and proceeded to trade down (session low 80.375) to support at the 80.45 level. It ended the session right on the support level and Hogs should react to this level on Tuesday as there is a confluence of support at this area. The 134 DMA is at 80.675 and trendline support is at 80.525. A breakdown from here could see a test of support at the 21 DMA (79.45) then 77.90. A bounce off of these levels could see a test of resistance at the 8 DMA (81.325) and then 82.375. A breakout above the high could see the Lean Hogs approach resistance at 83.80.
For those interested I hold a weekly livestock webinar on Friday, June 9 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.