Livestock Roundup (7.9.18)
Jul 09, 2018
LEQ8: -.30 at 106.075, trading in a range of 1.55
LEV8: -.975 at 1108.65, trading in a range of 1.975
GFQ8: -.875 at 151.325, trading in a range of 2.20
GFU8: -.525 at 151.75, trading in a range of 1.975
Cattle Commentary: Cattle futures attempted to breakout on Friday but reversed in the final hour of trade, that weakness spilled over into today’s session despite a firmer cash trade Friday afternoon. Cash came in from 112-114, above what many were expecting. The inability to rally on bullish news should be a caution flag for the bull camp. We have been outspoken on our opinion that the market will present range bound opportunities (see technicals below). This week’s Fed Cattle Exchange has a whopping 250 head listed, not a significant amount by any stretch, but could put the line in the sand for the week. Due to the July 4th Holiday, the weekly Commitment of Traders report was released this afternoon. The report showed that managed money bought 4,144 live cattle futures, expanding their net long position to 31,334. Managed money bought 634 feeders, expanding the net long position to 1,151.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 206.92 / 198.62
Change from prior day: / (1.11) / (.09)
Choice/Select spread: / 8.30
Live Cattle (August)
August live cattle marked lower highs and lower lows today, after failing against resistance Friday afternoon. The market found minor support at the 100-day moving average 105.85. The more significant pocket we are watching though comes in from 104.90-105.375. This pocket represents a key retracement and a previously important price point. A break and close below opens the door to 103.925. In our eyes this would be a great spot to look for value. We still like the short side off of last week’s failure but are playing that direction with December futures.
Resistance: 107.75-108.45***, 109.25-110.15****
Support: 104.90-105.375***, 103.925**, 101.65-101.90***
Feeder Cattle (August)
Despite trading lower for the last three sessions, the market has been fairly constructive, marking higher highs and higher lows since the lows in the middle of May. Previous resistance from 149.925-150.75 now becomes first support. A break and close below this pocket could accelerate the selling and press prices towards 147.95-148.15. The bulls will remain in control until a close below this pocket. On the resistance side of things, 154.075-154.15 is the pocket the bulls want to breakout above. The next line in the sand comes in at 155.975, the February 20th highs.
Resistance: 153.05-154.15***, 155.50-155.975****
Support: 150.275-150.75***, 147.95-148.425**, 144.90-145.50**
Lean Hog Commentary and Technicals (August)
The chop fest continues in lean hogs, keeping us on the sidelines for the time being. August futures finished the day down 2.80 at 72.625, trading in a range of 3.30. Due to the July 4th Holiday, the weekly Commitment of Traders report was released this afternoon. The report showed managed money bought 3,554 futures, putting them in the black by 73 contracts. For you dare devils out there, this is the bottom end of the risk range which puts the risk/reward in favor of the buy side; assuming you have an actual risk management strategy in place before entering the trade. If the bulls can defend the bottom end of the range, we could see some short covering take us back towards the 74 handle. The bears remain in control until consecutive closes above 77.25-77.80.
Resistance: 73.275-74.00**, 77.25-77.80***
Support: 72.45***, 70.10-70.55**
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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.