How Low Can They (Cattle) Go?

Livestock Roundup

April 24, 2019


Cattle & Hogs

Last Trades

LEM9: -2.575 at 118.55, trading in a range of 3.125

LEQ9: -2.15 at 116.05, trading in a range of 2.725

GFK9: -3.25 at 146.375, trading in a range of 3.40

GFQ9: -3.05 at 156.65, trading in a range of 3.375

Cattle Commentary:Cattle futures broke lower today, much of which was due to technical selling and long liquidation from funds. The bullish weather headlines had run their course last week and that premium is evaporating, which is something weve cautioned above for the last week. Todays Fed Cattle Exchange sold a whopping 124 head at 127.00. Cash trade started picking up in the south with reports of 126 in Texas and Kansas.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 232.96 / 220.28

Change from prior day: / (1.15) / (.98)

Choice/Select spread: / 12.68

Tech Talk

Live Cattle (June)

In yesterdays report we wrote about our first support pocket at 120-05-120.25, suggesting this would be a point to reduce short exposure (Sure we left some money on the table by reducing size early but we trusted the process and got some meat off of the bone.), and If the bulls cannot defend this pocket, there is a risk of accelerated selling via long liquidation.. The inability to defend that level opened the door for a run at our 4-star support pocket which we outlined in yesterdays report as 118.10-118.75. In our eyes, this pullback is a buying opportunity.

Resistance: 122.60-122.975***, 124.90-125.10**

Support: 118.10-118.75**, 117.30***

Feeder Cattle (August)

In yesterdays report we said, The reversal is encouraging for the bear camp, but they really want to see a move and close below 158.45-158.70 to open the door for a bigger drop.. That bigger drop is exactly what we got today, and honestly; the velocity of the move surprised us. Significant support comes in from 154.85-155.45, the bulls must defend this pocket to avoid a complete meltdown. First resistance tomorrow comes in at 157.75.

Resistance: 157.75***, 160.85-161.40****

Support: 154.85-155.45***, 153.60-153.85****

Lean Hogs (June)

June hogs worked down to 91.55, two ticks away from our first support at 91.50, a likely target for most traders as it represents the gap from April 3rd. A retest and close below this gap could trigger a wave of selling towards 88.50-89.225. On the resistance side of things, the first line in the sand comes in from 93.525-93.75.

Resistance:93.525-93.75***, 95.10**, 97.325-97.875****

Support: 91.50***,88.50-89.225***, 85.50-86.25****

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