The October Live Cattle contract saw follow through to the down side on Thursday, August 10, 2017, as it broke through the107.60 support level and tested support at 106.00. The low for the day is 106.40 and it ended the session at 106.45. If the 106.00 support level is taken out, we could see the 104.85 level tested. Resistance is at 107.60, 108.675, 109.825 and 110.80. The negotiated cash market was quiet today with light demand in all feeding regions. Thursday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 1.03 at 200.63 and Select down 0.42 to close at 196.19 on 144 loads. The choice/ select spread narrowed to 4.44. The estimated cattle slaughter for Monday was reported at 119,000.
The September Feeder Cattle contract broke down and made a new low for the move, trading to 140.75, which is just below the June 20 low (140.775). There was an attempt to bounce off the new low but it failed and traded back near the low by the end of the day. It ended the session at 141.025. This is Feeder Cattle’s 3rd time in this area and a break down below the low could see a test of support at 138.95. The 200 DMA is at 135.80. Resistance is at 143.50 and then 144.65.
The October Lean Hogs contract continued to consolidate between the 200 DMA (68.975) and the 67.90 support level. It had another small range, with the high at 68.50 and the low at 67.625. It formed a Doji candle and is forming a ledge. A breakout from this consolidation area could lead to a test of the next support / resistance level. A break out above the 200 DMA could lead to a test of resistance at 69.90. Trading below the low could see a test of support at 66.75.
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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.