Live Cattle
April Live Cattle rallied to a new high on Friday, March 24, 2017, trading to123.20 before a late day selloff challenged support at 121.45, making the days low at 121.625. It closed near the open forming a doji candle. This indicates indecision in the market and a breakout from this candle could lead to the April contracts next move. A breakout above the high, puts the May 2016 high (124.675) in focus. Resistance then comes in at 127.20 and then 129.10. A breakdown below the low could lead to a test of support at the 8 DMA (120.125). Support then comes in at the 13 (118.825) and 21 (117.75) DMAs. The June contract is now the lead contract in live Cattle as its volume has been greater than the April contract. I will be focusing on the June contract from now on. The June contract consolidated on Friday after making its new high (114.20) on Thursday. Trading below the Friday low (112.325) could lead to a test of support at 111.175. Support then comes in at 109.10 and 106.90. A rally above the Thursday high could lead to a test of resistance at 114.90 and then the 8 DMA at 116.775. The Cattle on Feed Report came out after the close on Friday and it showed:
Number of Cattle on Feed, Placements, Marketings, and Other Disappearance on
1,000+ Capacity Feedlots – United States: March 1, 2016 and 2017
: Number : Percent of
Item :—————————:
: 2016 : 2017 :previous year
———————————————————————————–
: —- 1,000 head —- percent
:
On feed February 1 …………………: 10,709 10,782 101
Placed on feed during February ………: 1,710 1,694 99
Fed cattle marketed during February ….: 1,591 1,648 104
Other disappearance during February ….: 58 56 97
On feed March 1 ……………………: 10,770 10,772 100
Feeder Cattle
April Feeder Cattle tested resistance (136.80) early Friday morning, trading to 136.825 and then drifted the rest of the session making its low at the end of the session trading down to 135.00 before ending the day at 135.50. A rally above the Thursday high (137.425), could lead to a test of resistance at 139.775 and then 142.625. Trading below the Friday low could lead to a test of support at 133.00 and then 131.75.
Lean Hogs
June is now the front contract month for Lean Hogs. The last two trading days saw a violent battle between bullish and bearish traders. Thursday’s action saw price drop to 74.125, just above support (74.225). The market reversed, causing panic buying to erupt and price rallied straight up to resistance (77.90), reaching 77.775 at the end of the session. Friday’s price action took June Hogs past resistance to 78.25 before failing and retracing most of the Thursday gain. It dropped to 75.025 and ended the session at 75.90. Follow through to the downside could lead price to test support at 74.225 and then 72.875. Another reversal higher could see price test the 77.90 resistance level. The next level of resistance is at 82.35.
For those interested I hold a weekly livestock webinar on Friday, March 31 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.
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.