Time to buy cattle and hogs? (7.31.18)
Jul 31, 2018
LEV8: -.45 at 109.35, trading in a range of 1.35
LEZ8: -.50 at 112.95, trading in a range of 1.375
GFQ8: -2.40 at 149.10, trading in a range of 2.625
GFU8: -2.05 at 149.30, trading in a range of 2.55
Cattle Commentary: Cattle futures were softer today as the grain market caught a strong bid on whispers that China is willing to come back to the negotiating table (is anyone really shocked?). Cash cattle has yet to develop this week, perhaps tomorrow’s Fed Cattle Exchange can put the line in the sand. The Fed Cattle Exchange has 1,060 offered, not a lot by any means but a live feed to set the bar. The bulk of last weeks trade came in at 112 live and 177 dressed. We have been very welcoming to a pullback over the last week as we had a short bias. Today we change that bias to the bull side as multiple technical indicators come into play (see full technical breakdown below).
PM Boxed Beef / Choice / Select
Current Cutout Values: / 204.27 / 198.38
Change from prior day: / (.45) / .40
Choice/Select spread: / 5.89
Live Cattle (October)
October live cattle took out Friday’s low and our support pocket from 108.975-109.15. As mentioned in yesterday’s report, this is a spot to dip the toes in. A pullback down to 107.80-108.175 is a pocket where we would want to get more aggressive. There are several indicators at these levels including retracements, moving averages, and previously important price points. The 50-day moving average is a few days away from crossing above the 100-day moving average, this is referred to as a “Golden Cross” and is looked at as bullish. It is....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Feeder Cattle (August)
August feeder cattle got hit hard today, taking prices down near our 4-star support pocket from 147.95-148.60. In our mind, this pullback represents a buying opportunity with the risk/reward favoring the bulls here so long as you keep things tight. If the bulls can hold this pocket, we will mark higher lows which could help lead us to higher highs and a retest of the February highs of 155.975. The previous 3 higher highs have been followed by a 4-5% pullback, this current pullback is right at 4%. Following these pullbacks, we have seen rallies of....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Lean Hog Commentary and Technicals (October)
October lean hogs finished today’s session down .525 at 50.70, trading in a range of 1.425. Lean hogs continue to be the black eye in an otherwise friendly livestock market. There’s an old saying around here, “the only thing you get from picking bottoms is stinky fingers”. While we don’t recommend jumping in to the long side blindly, we do think there is an opportunity here as some of our indicators are shifting. We are looking at call options, something that gives us good exposure with limited risk. Every rally begins with short covering (see beans/corn/cattle/etc/etc). The bulls need to achieve consecutive closes above....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
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