Feeder Cattle broke out of its trading range and traded above the July 19th high (154.925), making a new high for the up move. The new high is at 155.225 and is just below resistance at 155.275. Aggressive feedlot buying has taken the Feeder Cattle index up to 152.63 as of the11th of September. This is creating optimism for further advances going forward as feedlots are competing for cattle at higher prices even though the cash market may not be performing well. They have to fill packers’ needs and their buying actions may be reflecting a reduction in supply coming down the road. Reports the US is looking to resume trade talks with high level Chinese officials are also fueling optimism for future Chinese purchases in the US market. The Feeder rally to resistance could lead to a scalping opportunity as Feeders could test the 153.50 (now) support level on Thursday, in my opinion. I think traders will want to see how committed bulls are to the uptrend and a retracement is possible. Sell October Feeder Cattle and place your stop above resistance at 156.05.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, September 13th 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.