Livestock Roundup (4.15.18)
Apr 15, 2018
Last week in review
June live cattle finished the week up 2.05, trading in a range of 3.40
August live cattle finished the week up 2.00, trading in a range of 3.10
May feeder cattle finished the week up 4.775, trading in a range of 7.05
August feeder cattle finished the week up 4.075, trading in a range of 6.15
-Friday’s Commitment of Traders report showed that manage money sold 7,582 contracts, this puts their net long position at 26,789 futures. Managed money sold 351 feeder cattle contracts which puts their net short at 2,615. Keep in mind that this data is for April 3rd-April 10th.
-Cattle futures spent the first half of the week in consolidation mode and finished strong as whispers of firmer cash offered support to the futures market. The bulk of cash cattle to start the week came in at 117 but quickly went bid Friday afternoon with reports of 120-122.
-The next Cattle on Feed report will be out on Friday afternoon, we will have estimates out for you by mid-week.
We often say that tops and bottoms are a process not a point, and last weeks price action was a constructive step in that process. The bulls want to see a close back above 106.05-106.925, this would open the door for an extension towards 109.00-109.125. This pocket represents the 50% retracement from the March ’17 lows to the November highs. If the market fails to get legs in the first half of the week it is possible we see funds continue their long liquidation. On the support side of things, our first pocket comes in from 100.775-101.20. A break and close below this pocket takes us back to the recent lows of 97.075.
Feeder cattle saw a nice move higher on Thursday and Friday’s stabilization above 139.95 is encouraging. First support to start the week comes in from 139.425-139.95, so long as the bulls can maintain price action above this on a closing basis, we are looking for the market to make a move towards 143.35-144.60. This is a much wider resistance pocket than we would typically want, but there is a lot of significance in it. This includes the 50% retracement from the November highs to the April lows. This pocket also contains the 50, 100, and 200 day moving average. The market may struggle a bit from here. Shorter term moving averages are moving below longer-term ones which is often looked at as bearish.
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