Live Cattle
The August Live Cattle opened (114.825) lower on Thursday, June 22, 2017 and raced down to a new low for the down move at 113.40. The low is right at the 200 DMA (113.40) support level and buyers came in at this level and took price higher. The grinding rally took the entire session, but price traded up to the opening trade which is also the day’s high. The session formed a hammer candlestick and a rally from the high could take the August contract up to resistance at 116.425 and then 117.30. A break down below 114.45 could see price revisit the 200 DMA for the third time this week. A break down below the 200 DMA could set off some sell stops and put pressure on the market and take price down to support at 111.95. Cash trade for live cattle this week has been between $124.00 and $120.00. Dressed sales took place between $198.00 and $193.00. The higher prices came earlier in the week. Boxed beef cutout values were lower this afternoon on light to moderate demand and offerings. Choice cutouts were down $2.54 to $242.88 and select down $1.98 to $216.92 on 123 loads. The choice/ select spread is at $25.96. Thursday’s estimated slaughter is 116,000, lower than last week’s 117,000 and above last year’s 114,000. The Livestock Cold Storage and Slaughter Reports came out after the market’s close. May 2017 Highlights for the Cold Storage Report – Total red meat supplies in freezers were down 5 percent from the previous month and down 7 percent from last year. Total pounds of beef in freezers were down 10 percent from the previous month and down 11 percent from last year. Frozen pork supplies were down slightly from the previous month and down 4 percent from last year. Stocks of pork bellies were down 6 percent from last month and down 59 percent from last year. The Slaughter Report showed – Record High Total Red Meat and Pork Production for May – May 2016 contained 22 weekdays (including 1 holiday) and 4 Saturdays. May 2017 contained 23 weekdays (including 1 holiday) and 4 Saturdays. Commercial red meat production for the United States totaled 4.28 billion pounds in May, up 7 percent from the 4.00 billion pounds produced in May 2016. Beef production, at 2.16 billion pounds, was 6 percent above the previous year. Cattle slaughter totaled 2.75 million head, up 9 percent from May 2016. The average live weight was down 26 pounds from the previous year, at 1,307 pounds. Veal production totaled 6.3 million pounds, 6 percent above May a year ago. Calf slaughter totaled 39,300 head, up 11 percent from May 2016. The average live weight was down 11 pounds from last year, at 276 pounds. Pork production totaled 2.10 billion pounds, up 8 percent from the previous year. Hog slaughter totaled 9.95 million head, up 8 percent from May 2016. The average live weight was down 1 pound from the previous year, at 282 pounds. Lamb and mutton production, at 11.8 million pounds, was down 9 percent from May 2016. Sheep slaughter totaled 180,300 head, 3 percent below last year. The average live weight was 131 pounds, down 9 pounds from May a year ago. January to May 2017 commercial red meat production was 21.0 billion pounds, up 4 percent from 2016. Accumulated beef production was up 5 percent from last year, veal was down 2 percent, pork was up 3 percent from last year, and lamb and mutton production was down 5 percent.
Lean Hogs
The August Lean Hogs rally stalled at the 82.375 resistance area this week and Thursday’s trade saw price collapse from its 82.375 high and trade down to support at 80.45. The market bounced off of support a few times and then at the end of the day smashed through the support level and Lean Hogs traded down to the low of the day at 79.675. It ended the session at 79.825. A break down from the Thursday low could lead to a test of support at 77.90. If Lean Hogs can rally above 80.45, a test of resistance at the short-term moving averages (the 8, 13 and 21 DMA’s – 81.45 – 81.55) is possible.
For those interested I hold a weekly livestock webinar on Friday, June 22 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.