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Livestock Levels


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Live Cattle

June Live cattle made an attempt to rally on Wednesday, March 29, 2017 trading past the previous two days highs and then reversing course and closing near the days low, making a doji candle. Thursdays trade saw the June contract breakdown from the low of the doji, right from the open. It also took out the low of the March 22nd anchor candle and blew past support at the 200 DMA (110.875) trading down to 110.175. It found support here and retraced to the low of the anchor candle at 111.25. A late session breakdown took price below the 200 DMA, reaching 110.75 before ending the session at 110.825. Settlement was right on the 200 DMA at 110.875. The 200 DMA will be the fulcrum and a rally from the moving average could lead to a test of the Thursday high (111.60). A rally from here could see a test of the Wednesday high (112.625) and then the 8 DMA (113.125). The 100 DMA is at 113.975. A breakdown from the 200 DMA could test support at 108.90 and 108.35.

Feeder Cattle

This weeks trade in the May Feeder Cattle has formed a ledge. The high is at 133.975 and the low at 130.85. A breakdown from the low could lead to an objective of 127.75. A breakout above the high could lead to an objective at 137.10. Support is at the 200 DMA (130.15) and then the 21 DMA (129.00). There is a gap from the 3/15 low (129.10) to the 3/15 high (129.025). Resistance is at the 13 DMA (132.125) and then the 8 DMA (133.35). There is a gap from the 3/24 high (135.225) to the 3/23 low (135.275) on the switch from the April contract to the May contract (May volume higher).

Lean Hogs

June Lean Hogs rallied off of support at 72.875, making its low at 72.475. It closed near the high of the day (74.40) at 74.25 and above the high (73.475) of Wednesdays doji candle. If the June Lean Hogs can follow through to the upside, a test of resistance at 75.025 and then 77.90 is possible. A reversal to the downside could see price test support at 72.875 and then 70.00. The rally was the result of short covering in front of the Quarterly Hogs and Pigs report that came out after the close on Thursday afternoon. The Report showed:

United States inventory of all hogs and pigs on March 1, 2017 was 
71.0 million head. This was up 4 percent from
March 1, 2016, but down 1 percent from December 1, 2016. 
Breeding inventory, at 6.07 million head, was up 1 percent from last year, 
but down slightly from the previous quarter.
Market hog inventory, at 64.9 million head, was up 4 percent from last year, 
but down 1 percent from last quarter. 
The December 2016-February 2017 pig crop, at 31.4 million head, was up 
4 percent from 2016. Sows farrowing during this period totaled 3.01 million 
head, up 3 percent from 2016. The sows farrowed during this quarter 
represented 49 percent of the breeding herd. The average pigs saved per 
litter was a record high of 10.43 for the December-February period, compared 
to 10.30 last year. Pigs saved per litter by size of operation ranged from 
8.00 for operations with 1-99 hogs and pigs to 10.50 for operations with more 
than 5,000 hogs and pigs.

For those interested I hold a weekly livestock webinar on Friday, March 31 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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