Live Cattle
The October Live Cattle contract opened (114.95) strong and tested resistance at the 200 DMA (115.175) on Thursday August 3, 2017, trading up to the high (115.60) of the day early in the trading session. The rally couldn’t be sustained and price grinded lower and made the low (114.425) of the day at mid-session. A resurgence in effort from bullish traders took price up to the 200 DMA reaching 115.15 before falling back at the end of the day to end the session at 114.65. The cash market started the week on a weak note, trading at 115.00 in Texas on Monday, with a small amount trading at 116.00 on Wednesday during the fedcattleexchange auction. After the auction, trading ramped up with trades at 117.00 and 118.00 (some in Iowa at 118.50). Today cash had bids of 118.00 for live cattle and 188.00 for dressed. There weren’t any takers as producers backed off to 120.00 and 190.00 respectively. It is interesting that futures broke down with no takers of packer bids. Whatever the case, the candle that formed is a potential negative candle for the futures market. A break down below the session low could see price revisit support at 113.70 and then 112.45. Resistance is at the 200 DMA and then 116.85(this would close the gap created from the cattle on feed report). Wednesday afternoon boxed beef cutout values were steady on Choice and higher on Select on moderate demand and light offerings. Choice was up .10 at 205.16 with Select up 0.36 to close at 197.78 on 103 loads. The choice/ select spread narrowed to 7.38. The estimated cattle slaughter for Thursday was reported at 118,000.
Feeder Cattle
The September Feeder Cattle contract rallied to a new high (151.725) for the up move, approaching resistance at the 152.30 level, before failing and trading to the low (150.05) of the day. The market made another attempt at resistance reaching 151.65, and then falling back and ending the session at 150.75. This is just above the 149.975 support level and could be the key pivot for the Feeder Cattle market on Friday. A break below here could see a test of support at 148.30 and then 147.475. A rally from the 1499.975 level could see a retest of the 152.30 level and then 153.70. The session formed a Doji, indicating indecision in the market.
Lean Hogs
The October Lean Hogs traded inside the Wednesday session’s trading range forming an inside candle. The market continues to react to the 64.90 support level, with 3 failed attempts to break through to the down side. It is in the middle of the 67.80 – 64.90 trading band. A break out from this band could lead to the next trading range levels (69.90 to the upside and 61.80 to the downside).
For those interested I hold a weekly livestock webinar on Friday, August 4 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.