Livestock Roundup (4.25.18)
Apr 25, 2018
LEM8: .70 at 105.75, trading in a range of 1.175
LEQ8: .475 at 105.40, trading in a range of 1.05
GFK8: 1.375 at 141.525, trading in a range of 1.975
GFQ8: 1.20 at 147.675, trading in a range of 2.35
Cattle Commentary: Despite it being a “quiet” day, cattle futures managed to finish the session on higher ground. Today’s Fed Cattle Exchange yielded no sales out of the 3194 offered; 121.00 and 120.25 were passed on. With a wide basis, we continue to feel optimistic that futures will hold their ground here. We are not suggesting that they will run to cash when April goes off of the board, we are suggesting that futures and cash will likely work together to narrow the gap. This is the widest April/June spread we have seen since the 1980’s. Cash trade has been non-existent outside of some cash trade for 3 weeks out reported from 119-121. Boxed beef worked higher again today.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 218.53 / 203.15
Change from prior day: / .88 / 1.04
Choice/Select spread: / 15.38
Live Cattle (June)
June live cattle continue to loiter near the pivotal 106 level. The bulls MUST get something going before the weekend to set the tone for next weeks trade. A failure to achieve a breakout of our resistance pocket from 106.05-106.925 over the next two sessions would likely lead to some additional long liquidation from the funds. There is still a gap on the charts from last Friday’s close to Monday’s open, that comes in at 104 which represents first technical support. A close below the gap could extend the pressure back down towards 101.20-101.85.
Resistance: 106.05-106.925***, 109.00-109.55****
Support: 103.95-104.00**, 101.20-101.85****, 96.35-97.075****
Feeder Cattle (May)
Feeder cattle futures managed to hold technical support which we had defined as 139.70 (happened to be today’s low). This was the gap from Friday’s close to Monday’s open. The ability to maintain ground after filling the gap was a green light for buyers to step back in. The market managed to close near the highs of the day which is a good sign for tomorrows trade. First resistance comes in from 142.65-142.90. This resistance pocket represents the 50-day moving average and previously important price points. A break and close above could extend the rally to 143.35-144.65. This is a wider resistance pocket than we would typically want, but there is a lot of significance in it. This pocket contains the 100 and 200 day moving average, along with the 50% retracement from November highs to the April lows. We would consider flattening longs and looking short on the first test.
Resistance: 142.65-142.90**, 143.35-144.65****
Support: 139.70**, 135.75-136.325***, 128.875****
Lean Hog Commentary and Technicals (June)
Lean hog futures went and tested first support which we outlined as 73.95-74.00 in yesterdays report (today’s low was 73.95). Buyers stepped in at this level which pressed prices higher into the close. June hogs finished the session up .475 at 75.30, this after trading in a range of 1.65. If the bulls can get some momentum into tomorrows session we could see a retest back to 76.00-76.25. This pocket represents a key retracement level which we had listed previously as support.
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.