Livestock Roundup (5.15.18)
May 15, 2018
LEM8: -1.70 at 102.925, trading in a range of 2.35
LEQ8: -1.45 at 100.45, trading in a range of 2.45
GFQ8: -1.85 at 138.525, trading in a range of 2.55
GFU8: -1.675 at 139.125, trading in a range of 2.275
Cattle Commentary: Cattle futures picked up where they had left off this morning with a wave of panic selling coming into the market through the first 45 minutes of trade. Though the panic subsided, it was not enough to lure buyers back into the market. If we see the market work sharply lower again tomorrow it is possible we start to see margin call pressure too. Cash trade this week has commenced with early sales coming in at 117 in Kansas and Texas this afternoon, a sharp decline from the 126 less than two weeks ago. Tomorrow’s Fed Cattle Exchange has 2,586 head offered. Even if we see cash start to decline at a more rapid pace, there is still a wide basis which could offer some support to futures.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 231.64 / 209.51
Change from prior day: / (.48) / .39
Choice/Select spread: / 22.13
Live Cattle (June)
June live cattle printed their lowest price in nearly a month as the decline in cash prices has fed into technical selling. The bottom end of support from 103.825-104.50 gave way and the selling accelerated for the second straight day. Previous support now becomes first resistance; the bulls need to reclaim 103.825 to try and halt the sharp turn. On the support side of things, the next pocket comes in from 101.20-101.85. If this pocket gives way it all but guarantees a retest of the April lows at 97.075.
Resistance: 103.825-104.50**, 106.05-106.75**, 107.575-108.10***
Support: 101.20-101.85****, 96.35-97.075****
Feeder Cattle (August)
The trend of lower lows and lower highs continued today with futures marking their lowest price since we put in a near term bottom on April 4th. Previous support from 139.95-140.375 now becomes first resistance. The bulls must achieve consecutive closes back above this level to invite new buyers back into the market. On the support side of things, there’s not a lot in the way until 134.975-135.00. The RSI (relative strength index) is currently at 36 which is the lowest level we have seen since the April lows; but still not in “oversold” territory.
Resistance: 139.95-140.375**, 143.95-144.80****, 145.50-145.80***
Support: 137.00-137.80**, 134.975-135.00****
Lean Hog Commentary and Technicals (June)
Lean hog futures softened up today on talks that there would be no NAFTA agreement this week. June futures finished the day down 1.40 at 74.75, this after trading in a range of 2.225. 4-star technical support from yesterdays report held perfectly at 73.90-74.075. This pocket represents a key retracement on the year, along with the gap from May 7th. Depending on your own personal bias, this is a spot to be active; ie: bears reducing/bulls buying. If the bulls cannot defend this pocket this week, we could see a retest of the April 4th lows which come in at 70.25. On the resistance side of things, 75.85-76.30 is what we are watching. A close above gives a green light to breakout and run towards 79.30-79.90.
Resistance: 75.85-76.30**, 78.05-78.70***, 79.60-79.90****
Support: 73.90-74.075****, 70.25-70.90***
Sign up for a free trial of 1 or all 5 of our daily Blue Line Express commodity reports!
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.