Livestock Roundup (4.23.18)
Apr 23, 2018
LEM8: 1.25 at 104.975, trading in a range of 1.175
LEQ8: 1.15 at 104.95, trading in a range of 1.125
GFK8: 1.20 at 140.525, trading in a range of 1.30
GFQ8: 2.45 at 146.95, trading in a range of 2.275
Cattle Commentary: Cattle futures started the week on firm footing and managed to old that strength into the close. Tomorrows session will likely be pivotal in setting the tone for the remainder of the week (see technicals below). Cash trade last week wrapped up at 124 which helped support prices today, we are expecting to see that steady this week. Friday’s Cattle on Feed report was neutral which is bullish when looking at the past 12 reports. This afternoons Cold Storage report showed total beef stocks at 460.3 million pounds, this is down 8% from last year and is 4% below the 5-year average. This was the largest February decline since 2005. Wednesday’s Fed Cattle Exchange has 3,194 head offered, the third consecutive week of “noteworthy” listings. Boxed beef was “lit” today.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 215.11 / 201.72
Change from prior day: / 3.13 / 1.59
Choice/Select spread: / 13.39
Live Cattle (June)
June live cattle futures managed to hold ground but have so far left a gap on the chart, this comes in at 104.00 and will represent first support this week. We remain optimistic on price action in the near term, but we want to see confirmation from a breakout above 106. A conviction close above resistance opens the door to an extension towards 109.00-109.975. This pocket represents previously important price points, the 50-day moving average, and the 50% retracement from the March ’17 lows to the November highs. If the market can achieve a run towards this pocket, we would reduce long exposure and likely consider looking to the short side.
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 gaped higher on the open but failed to see much follow through, finishing the session .025 higher from the first trade. First support this week will come in from 139.70-139.95. This pocket represents the gap, along with a key Fibonacci retracement from the November highs to the April 4th lows. On the resistance side of things, 142.50-142.60 is the first pocket. 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).
Resistance: 142.50-142.60**, 143.35-144.45****
Support: 135.75-136.325***, 128.875****
Lean Hog Commentary and Technicals (June)
June lean hog futures gaped lower closing down 1.25 at 76.30, trading in a range of 1.20 for the day. This afternoons Cold Storage report showed pork stocks at 614.9 million pounds, this is up 8% from a year ago, but still 3% below the five-year average. This report didn’t have much in terms of “surprises”. Today’s price action certainly shakes things up on the chart. First support in last week’s reports held from 76.00-76.25, a break below puts the ball in the bears court. First technical resistance comes in from 77.325-77.50. A failure to reclaim ground above this level could lead to some long liquidation and press prices back towards the 74 handle.
Resistance: 77.325-77.50**, 79.75-79.90****, 80.75-81.325***
Support: 76.00-76.25***, 73.95-74.00**
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