Live Cattle by Ben DiCostanzo
Apr 30, 2018
On Friday April 27, 2018, the June Live Cattle contract started slowly, opening at 104.60, trading down to test support at 104.20 (104.20 session low), then grinding higher to 105.20 by noon central time and pulling back to 104.80, a sleepy Friday trading session. Then bang! Someone fired a shot and cattle stampeded up to a new high (107.225) almost going up limit on the day. Wow! The shot that was fired was, in my opinion, reports that live cash trades took place in Kansas at 124.00. Cash did trade there and in Texas too. Later reports showed live cattle trading at 125 126 in Nebraska and some trading in Colorado at 126.00. Iowa/ Minnesota had dressed sales at 195 197. Last report I have is 198.00 bids in Nebraska and no sellers for dressed. A great way to end the week for producers! Traders will have the weekend to digest the higher cash trades and what effect it should have on the historically wide basis between cash and June futures. Should futures rally early next week, the basis should narrow as the futures move towards cash. Will that lead to higher cash prices? The rally in futures took price near the 107.30 resistance level but it was respected as cattle didnt go up limit. Follow through to the upside could lead to a test of resistance at 108.65. Resistance then comes in at 110.80. A failure to follow through could see some consolidation within the Friday range. Boxed beef cutout values higher on choice and steady on select on moderate demand and light offerings. Choice was up 1.59 to 221.74 and select down 0.16 to 204.32 on 92 loads. The choice/ select spread widened to 17.42. Slaughter for Friday was at 111,000. With Saturday estimates at 38,000, the total for the week should be at a healthy 623,000.
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Senior Market Strategist
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.