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Livestock Report


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Live Cattle

The June Live Cattle broke down from the open (124.975) on Wednesday, May 10, 2017, trading down to the low of the day at 122.225 then grinding higher to the high for the day at 125.125. The low is near the 50% retracement (121.61) of the rally from the April 5th low at 108.675 to the May 4th high at 134.55. The session formed a Dragonfly doji candle indicating indecision in the market. The formation of the candle could indicate the June contract may be ready to test resistance levels. If the June contract can sustain a rally above the Wednesday high, a test of resistance at 127.15 is possible. Support is at the 38.2% retracement level at 124.65 and then 123.30. The fedcattleexchange auction took place today with 1,993 cattle for sale. 1,287 cattle were sold with a price range of $137.50 to $140.00. There was one sale at $132.00 for 17 to 30 day delivery. This is approximately $8 lower than last week. After the auction Cash trade lightly with sales in Kansas at $138.00 and dressed sales in Nebraska at $224.00. Boxed Beef cutout values were higher on moderate demand and light offerings. Choice cutout value ended up $2.42 higher at $244.58 and Select Cutout value was up $1.59 at $224.62.

Feeder Cattle

The August Feeder Cattle contract gap opened (150.85) lower and traded down to the low of the day (147.32). It then staged a sharp rally, making a new high for the day at 151.075. The low is just above the 38.2% retracement level at 147.23. The session formed a hammer candlestick and this could set up a rally to resistance. A rally above the high could lead to a test of resistance at the Tuesday low (152.15), which would close the gap that was created from Wednesdays trade. A failure from here could see a retest of the 38.2% retracement level.

Lean Hogs

The June Lean Hogs tested resistance at 77.90, reaching a high at 77.95 on the open and then trading down to the low at 76.775. It consolidated for the remainder of the day and settled in the middle of the range at 77.20. Hogs could continue to consolidate around the 77.90 level before breaking out to its next level. Resistance is at 80.45 and 82.375. Support is at 76.025 and 74.40.

For those interested I hold a weekly livestock webinar on Friday, May 12 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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