LEM9: -2.575 at 118.55, trading in a range of 3.125
LEQ9: -2.15 at 116.05, trading in a range of 2.725
GFK9: -3.25 at 146.375, trading in a range of 3.40
GFQ9: -3.05 at 156.65, trading in a range of 3.375
Cattle Commentary: Cattle futures broke lower today, much of which was due to technical selling and long liquidation from funds. The bullish weather headlines had run their course last week and that premium is evaporating, which is something we’ve cautioned above for the last week. Today’s Fed Cattle Exchange sold a whopping 124 head at 127.00. Cash trade started picking up in the south with reports of 126 in Texas and Kansas.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 232.96 / 220.28
Change from prior day: / (1.15) / (.98)
Choice/Select spread: / 12.68
Live Cattle (June)
In yesterday’s report we wrote about our first support pocket at 120-05-120.25, suggesting this would be a point to reduce short exposure (Sure we left some money on the table by reducing size early but we trusted the process and got some meat off of the bone.), and “If the bulls cannot defend this pocket, there is a risk of accelerated selling via long liquidation.”. The inability to defend that level opened the door for a run at our 4-star support pocket which we outlined in yesterday’s report as 118.10-118.75. In our eyes, this pullback is a buying opportunity.
Resistance: 122.60-122.975***, 124.90-125.10**
Support: 118.10-118.75**, 117.30***
Feeder Cattle (August)
In yesterday’s report we said, “The reversal is encouraging for the bear camp, but they really want to see a move and close below 158.45-158.70 to open the door for a bigger drop.”. That bigger drop is exactly what we got today, and honestly; the velocity of the move surprised us. Significant support comes in from 154.85-155.45, the bulls must defend this pocket to avoid a complete meltdown. First resistance tomorrow comes in at 157.75.
Resistance: 157.75***, 160.85-161.40****
Support: 154.85-155.45***, 153.60-153.85****
Lean Hogs (June)
June hogs worked down to 91.55, two ticks away from our first support at 91.50, a likely target for most traders as it represents the gap from April 3rd. A retest and close below this gap could trigger a wave of selling towards 88.50-89.225. On the resistance side of things, the first line in the sand comes in from 93.525-93.75.
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.