Livestock Report from Ben DiCostanzo
Apr 26, 2018
On Wednesday April 25, 2018, the June Live Cattle contract tested support at the 104.85 level, making the low at 104.625. It grinded higher from the low, trading up to 105.80 and then tested support again, trading down to 104.825 before trading back to the high at the end of the session. It settled at 105.575 and ended the day at 105.70. The rally couldn’t get to the 106.025 resistance level and this will be the key for the Thursday trading session, in my opinion. A breakout above here could see a retest of the Tuesday high and then 107.30. A failure to break out above 106.025 could lead to a test of the 104.85 to 104.20 support zone. Negotiated cash trade on Wednesday was mostly inactive on light demand in all major feeding regions. Wednesday afternoon boxed beef cutout values were higher on moderate demand and offerings. Choice was up 0.88 at 218.53 with Select up 1.04 to close at 203.15 on 142 loads. The hide and offal value from a typical slaughter steer for today was estimated at 9.63 per cwt live, up 0.17 when compared to Tuesday’s value. Estimated cattle slaughter for today is 118,000, last week 119,000 and a year ago 118,000.
The August Feeder Cattle contract approached support at the 145.05 level early in the trading session. It made the session low at 145.425 then grinded higher for the remainder of the day, trading up to the high at 147.775. It settled at 147.425 and ended the day at 147.675. It settled just above the 200 DMA (147.40) and this will key trade on Thursday, in my opinion. A failure from the 200 could lead to a test of the Wednesday low and support at 145.05. Support then comes in at 144.20. Trading above the 200 DMA could see the 148.625 Tuesday high challenged and then a push to resistance at 149.975. Resistance then comes in at 152.30.
The June Lean Hogs contract continued its breakdown and tested support at 74.25 making the low at 73.95. This is just above the 61.8% retracement level (73.65). It rallied from here and traded up to the 75.60 (session high) resistance level. It broke down from the high and traded to the 74.80 support level (74.60 low). It recovered from here and price approached the high reaching 74.45. It settled at 75.35 and ended the day at 75.30. A rally off the high could send price up to resistance at 76.325. Resistance is then at the declining 8 DMA (76.80). A breakdown from 75.60 could see a retest of support.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, April 26 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
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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.