Live Cattle
The April Live Cattle contract opened at 121.925 and ticked higher to the session high at 122.15, which is right at the upward sloping trendline (122.15) on Friday, March 16, 2018. It failed at the trendline and traded lower for the remainder of the day, making the low at the end of the session at 120.875. It ended the day at 120.90. The low is just above the March 13th low (120.75) and the 120.50 support level. A breakdown below these levels could see price test the 119.15 support level and then the 200 DMA at 118.20. A rally off of support could see price retest the rising trendline at 122.30. The negotiated cash trade was limited in all major feeding regions. Friday afternoon boxed beef cutout values were firm on Choice and Select on moderate demand and light offerings. Choice was up 0.60 to 225.59 and Select was up 0.55 at 216.86 on 86 loads. The choice/ select spread widened to 8.73. The estimated cattle slaughter for Friday was reported at 107,000.
Feeder Cattle
The April Feeder Cattle contract opened at 140.825 and attempted to move higher, reaching the early morning high at 141.00. The weak move higher led to a break down to a new low for the move at 139.60. A late morning rally took out the early high and made the session high at 141.175. Feeders couldn’t sustain the rally and price came tumbling down, trading near the low of the day at 139.80. It ended the day nearby at 140.00. It closed below the 140.775 support level and long-term trendline support (140.625). If price is unable to climb above these levels on Monday, then a test of support at 138.95 is possible. If price falls below here and takes out the December 22nd low at 138.30, the downtrend established off of the May 4th high continues. If Feeder Cattle can rally and hold above 140.775; a test of resistance at the declining 8 DMA (142.525) is possible. Resistance then comes in at 143.50 and the nearby declining 13 DMA (143.975).
Lean Hogs
The April Lean Hogs contract opened at 65.70 and rallied to the resistance range at 66.425 – 66.55, reaching the session high at 66.525. It failed at resistance and broke down and traded lower throughout the day and made the session low at the end of the day at 65.375. It ended the session at 65.425. It formed an inverted hammer candlestick. This could signal a possible rebound in price. If Lean hogs can rally above the open and then the downward sloping trendline (65.875), it may be able to test the resistance range. Resistance then comes in at the declining 8 DMA now at 67.10. A break down below the low could lead to a test of support at 64.80. Support then comes in at 63.325.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, March 22nd at 3:00 pm. 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.v