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Livestock Levels


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Live Cattle

April Live Cattle gap opened higher on Wednesday, March 22, 2017, (Tuesday high -120.075 Wednesday low 120.15) and never looked back as it reached its allowable limit up move of 3 cents/ pound during the fedcattleexchange auction. Price then consolidated within a 1c/ lb range 121.90 low to 122.90 high) for the rest of the day. It ended the session at 122.375. The fedcattleexchange auction had 3,928 cattle for sale from Nebraska, Texas and Kansas. 2,195 head were sold with most of the sales coming from Nebraska. The range in Nebraska was from $133.00 to $136.50. Texas had a couple of sales and they were at $128.00 and 129.50. Kansas had one sale at $130.00. After the auction cash trade was limited on light demand. There were some dressed sales in Kansas at $212 for 15 30 day delivery. Nebraska had some live sales at $131.00. Trade was inactive in other regions. Boxed beef cutout values were lower on Choice higher on Select. Demand was light and Choice was down $1.93 to $223.00, while Select was $0.39 higher at $215.80. Cattle Slaughter is estimated at 116,000, higher than last weeks 113,000 and last years 106,000. Futures raced past the January 19th high (121.45) and stalled because of the limit restrictions. The close above the January 20 high puts the May 2016 high (124.675) in focus. Resistance then comes in at 127.20 and 129.10. A failure from the Wednesday high could lead to a test of support at the January 19th high, then the 8 DMA (118.85) and then the 13 DMA (117.775). The Cold Storage Report came out after the close for February and it showed total red meat supplies in freezers were up 1% from the previous month, but it is down 6% from last year. Total pounds of beef in freezers were down 7% from the previous month and down 1% from last year.

Feeder Cattle

April Feeder Cattle broke out to the upside from the inside candle formation, rallying just past resistance (136.80) to the high of the day at 137.10. It ended the session just below resistance at 136.525. This has been an impressive rally. There havent been any pullbacks since breaking out above the March 8th high (123.625). It is at another important resistance level (136.80). There is a lot of congestion just above here from the consolidation area from April 2016 to August 2016. Feeder Cattle could struggle in this area. There is resistance at 139.775 and then 142.625. Support is at 133.00 and the 131.75.

Lean Hogs

April Lean Hogs consolidated today, forming an inside candle formation and a spinning top candle. Todays range was inside Tuesdays High and low and the candle body was narrow. A breakout from the inside candle could lead to Lean Hogs next move. Trading below the Wednesday low (67.925) could lead to a test of support at 64.90. Breaking above the high (68.725) could lead to a test of resistance at 70.00 and then the March 14 high at 71.275. The Cold Storage Report showed frozen pork supplies up 9% from the previous month, but down 9% from last year. Stocks of pork bellies were up 15% from last month, but were down 74% from last year.

For those interested I hold a weekly livestock webinar on Friday, March 24 at 3:00pm. 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.

Sign Up Now

Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

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.



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About the author


Ben DiCostanzo
Senior Market Strategist
Walsh Trading

I began my career in the Securities industry working as a runner on the floor of the New York Stock Exchange while I attended Pace University. I then started working for Salomon Brothers in their Government Bond Trading arena. After graduating from Pace University with a degree in Accounting, I transferred to Chicago and became a member of the Chicago Mercantile Exchange utilizing my experience to execute trades and manage risk for institutional clients as a broker for Salomon Brothers on the trading floor. I then embarked to trade for my own account in the stock indices pits as a local before moving off the floor to aid and assist individual clients in their trading endeavors. I now work at Walsh Trading holding a series 3 broker’s license whose duties include being the firm’s Chief Market technician.

I understand that every client's needs are different, and I pride myself in tailoring my service to each client's unique circumstances and needs. Individual client experience, risk tolerance, and capital all play a role in how I approach the markets. I am involved in all markets using technical analysis to find opportunities. My approach is driven by the principles of capital preservation.

My trading philosophy is that if you can recognize and manage the risk, you have a better chance to be successful in trading. I advise clients to always use stops as money management in my opinion is the most important ingredient in trading commodities.

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