Live Cattle Outlook
Market updates from Walsh Trading.
Live Cattle –
In four of the past five weeks Live Cattle made new highs. Last week was no exception. However, after making new highs on Thursday, sellers came in and a pullback resulted. The pullback formed a Bearish Engulfing candle. An engulfing candle formation is a two bar formation. The 1st candle’s open and close is engulfed by the 2nd candles’ open and close. It is considered a reversal formation. It can be either bullish or bearish. It depends where it takes place in the price action. This one is a bearish formation in my opinion. It also formed an outside day where it took out both the high and low of the previous day. It also covered the four days prior highs’ and lows’. This in my view is another negative condition. The weekly chart has also the makings of a reversal formation. Cattle had a strong rally 2 weeks ago and then made another new high this week. After making the new high Cattle couldn’t hold on to it. Buyers and sellers fought it out and ended up closing the week near the open. This is a Doji. The neutral end to the week in my view shows buyers are becoming cautious. A red candle close this week would form an Evening Star Formation. This is considered a reversal signal. If cattle takes out last week’s low at 164.40, sellers could take control. The 38.2% retracement lies in wait at 159.90 and the weekly 8 period simple moving average is at 158.6.
Please join me as I take a look at the Livestock markets on October 22, 2014. If you are not able to attend the webinar live, a recording will be sent to you if you register for the event.
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Senior Market Strategist
Walsh Trading, Inc.
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Tim Hannagan's Weekly Grain Report
May 20, 2014
This is Tim Hannagan it's Tuesday, May 20. Looking back on corn, its numbers remain supportive. Monday’s inspection report, a gauge of demand showed 41 million bushels were inspected to be shipped. Anything over 40 million bushels is bullish as it keeps corn exports ahead of USDA projections. Last month’s USDA crop report raised exports and lowered our ending stocks for the fifth consecutive month, showing a stronger demand pace and talk of lower stocks on the June report. Monday’s planting progress came in at 73% complete. Key Midwest producers read like this. Illinois 84%, Indiana 72%, Iowa 84%, Missouri 92%, and Nebraska 91%. On next Tuesday’s crop progress report these states will climb over 90% planted. Then the psychology changes on weather. It's no longer weather and its impact on planting but weathers impact on emergence and eventual production. To date a warmer drier outlook meant a faster planting pace and lower prices. After Tuesday, it’s bullish as timely rain is needed for good development. Just a reminder a holiday is coming up with markets closed Monday. Seasonally corn turns up after the Memorial Day holiday. Support on July corn is 4.58 with resistance 4.90. Any move down towards 4.60 should be bought as that would be the worst case scenario before the crop is made. Wheat psychology may be changing as well. Monday’s condition report showed 29% of the crop in good to excellent condition, down for the fourth consecutive week and the lowest since April 7. This is all due to lack of rain in the Western plains wheat states. Yet, the July futures hit a low of 5.62 Monday, 80 cents off the 10 day prior high. With harvest starting in early June, this could be a sign funds are done buying crop decay. Drought starts out bullish then turned bearish to pricing. Wheat’s grown for human consumption with the processing of pastas, breads, and snack cakes. When the crop has a high rating, everyone wants it. When ratings are low demand is weak, with much of the wheat suitable only for the feed ration at low cash bids. Wheat also forces more corn into the feed ration due to its price to wheat two dollars cheaper per bushel. Big inventories in Europe are cheaper to the U.S. leaving the U.S. a third or fourth port of origin for wheat. July wheat resistance is 6.90 with major support 6.65. A close under and 6.44 is next.
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