Apr 24, 2018
LEM8: -.025 at 104.85, trading in a range of 1.90
LEQ8: -.40 at 104.675, trading in a range of 1.85
GFK8: -.675 at 139.925, trading in a range of 2.20
GFQ8: -.85 at 146.275, trading in a range of 2.375
Cattle Commentary: Cattle futures gaped higher on the open and marked their highest price of the month. Unfortunately for the bull camp, the excitement was short lived, and the market reverted back to the “fade the afternoon trade”. There were some reports of possible lower cash which goes against the grain of what most market participants are looking for this week; early offers have been at 125. The bulk of cash trade last week came in from 121 in the south to 124 in the north. Tomorrow’s Fed Cattle Exchange has 3,194 head offered, the third consecutive week of “noteworthy” listings. We still think there is more upside in the cattle complex over the intermediate term. The question you have to ask yourself is are you going to be a trader or an “investor”. Boxed beef was higher yet again today and is expected to continue to work higher in the intermediate term.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 217.65 / 202.11
Change from prior day: / 2.54 / .39
Choice/Select spread: / 15.54
Live Cattle (June)
We were pretty confident that the next test of our resistance pocket from 106.05-106.95 would be the one to give us that breakout move, unfortunately today was not the day. We saw the market stall out midday, just as we have on several other occasions over the past few weeks. We were proactive with clients, especially the ones with short dated options. We encourage clients to be proactive and to not be paralyzed by hope (of a bigger move). How proactive you are depends on if you’re looking at the market as a trader or investor. We have been working with clients to establish a core position and trading around that with futures and/or options. Technical resistance and support remain intact for tomorrows session.
Resistance: 106.05-106.925***, 109.00-109.975****
Support: 103.95-104.00**, 101.20-101.85****, 96.35-97.075****
Feeder Cattle (May)
May feeders made a run at our resistance pocket which we had outlined as 142.65-142.90 but fell short in attracting additional buying interest. This resistance pocket remains intact for tomorrow’s session. The more significant resistance comes in from 143.35-144.45. This pocket includes the 100 and 200 day moving average, previously important price points, and the 50% retracement from the November highs to the April lows. Shorter term moving averages are working below the longer-term ones which is often looked at as bearish and has earned the nickname “death cross” (50 and 100 day moving averages crossing below the 200 dma). On the support side of things 139.70 is the first line in the sand.
Resistance: 142.65-142.90**, 143.35-144.50****
Support: 139.70**, 135.75-136.325***, 128.875****
Lean Hog Commentary and Technicals (June)
June lean hog futures had a technical breakdown today that will likely lead to lower prices in tomorrows session. June futures finished the session down 1.45 at 74.925, trading in a range of 1.675. Today’s pressure will likely spill over into tomorrows trade with little support until the 73.95-74.00 level. We would like to think that we can continue to see seasonal strength come into the market but will want to see the dust settle. Previous support now becomes resistance at 76.00-76.25. If the bulls can reclaim this level, we would expect to see higher highs in the very near term.
Resistance: 76.00-76.25**, 77.325-77.50**, 79.75-79.90****
Support: 73.95-74.00**, 70.25-70.90***
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.