Livestock Review from Ben DiCostanzo
Apr 24, 2018
On Tuesday April 24, 2018, the June Live Cattle contract gap opened (105.50) higher from the Monday high (105.475) closed the gap and traded up to the high of the day at 106.675. This is above the April 17th high (106.175) and is a new high for the up-move. It couldn’t hold onto the gain however and broke down from here and by the end of the day it made the session low at 104.775.It settled at 105.05. It formed a shooting star candlestick. The rally couldn’t hold above the 106.025 resistance level and took price back to the 104.85 support level. This level will be the key to trade for Wednesday, in my opinion. A break down from 104.85 could lead to support at 104.20 and then 103.00. A rally off the 104.85 level could see price revisit the 106.625 resistance level and then try to breakout to resistance at 107.30. On Tuesday negotiated cash trade was mostly inactive on light demand in all major feeding regions. Tuesday afternoon boxed beef cutout values were sharply higher on Choice and firm on Select on moderate to good demand and moderate to heavy offerings. Choice was up 2.54 at 217.65 with Select up 0.39 to close at 202.11 on 146 loads. The choice/ select spread widened to 15.54. The hide and offal value from typical fed cattle for today was estimated at 9.46 per cwt live, down 0.33 from Monday’s value. The estimated cattle slaughter on Tuesday was reported at 120,000.
The August Feeder Cattle contract broke higher early in the trading session, blasting above the 200 DMA ((147.375) and resistance at 147.50 trading to the session high at 148.625. It couldn’t hold the rally and broke down below the 200 DMA trading down to 146.475. It made repeated attempts to get above the 200 DMA but in the end couldn’t do it. It broke down at the end of the day, making a new low at 146.25. It settled at 146.475. The low is right at support at 146.20 and a breakdown from the low could see price trade down to support at 145.05 and then 144.20. The 100 DMA is nearby at 143.85. Holding the 146.20 level could see a retest of the 200 DMA and then the Tuesday high.
The June Lean Hogs contract continued its breakdown and broke support at 76.225 and then 75.60 on its way to the low at 74.75. This is right at the 74.80 support level. It settled at 74.825. A continued sell-off could send price down to support at 74.25 and then 73.65 (61.8% retracement of the rally from70.25 to the 79.10 high). If the low holds, consolidation within the Tuesday range (76.425 high) is likely.
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.