Long live cattleLive cattle went to the eight hour fib and has started to create a bounce. With corn, soy beans, and we even wheat up 2 to 4% today. Live cattle is going to potentially make up that gap in the next few days.
Cattle
Limbo in December Live Cattle December Live Cattle has been in a virtual free-fall since making contract highs back on September 19th. We’ve sold off nearly $7 since scoring the new high. To say it’s been a remarkable year for live cattle futures would be an understatement - we’ve made all time highs, and bucked bearish seasonal tendencies along the way. The strength observed across the cattle contracts is well substantiated by national cash-trade transactions, and cattle on feed numbers - two of the most important components of fundamental analysis in the cattle markets.
Where will we find support?
If you look at the retracement from the contract’s low to the contract’s high, we are quickly approaching the 23.6% retracement level at 183.100. This could be viewed as our first major pocket of support, as it is both a significant fibonacci retracement level, but also a point where we saw prices pace through continuously between July and September.
Trendline Support
In the case that the 23.6% retracement does not hold, another key area to consider is long-held trendline support. Now, that could be a ways away from where we’re at. If price continues to free-fall, trendline support should come into play around 181. But, if prices stabilize and begin moving sideways over the course of the coming weeks, both trendline support and the 23.6% retracement level will converge. This convergence serves a “cluster” of evidence that provides more credibility to the support pocket.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
What Disinflation - Beef Price Went Up 64 percent in 5 YearsCME: Live Cattle ( CME:LE1! ), Lean Hog ( CME:HE1! )
Last month, the Bureau of Labor Statistics (BLS) reported that US inflation on food items was 5.7% in June, exactly half of its peak of 11.4% in August 2022. Food inflation is at its lowest level since November 2021.
Under the sub-category “Meats, poultry, fish, and eggs” from Food-at-home, the BLS data shows a negative 0.2%, meaning that meat prices declined in the past year.
The official data contradicts my own experience. Anyone who has been shopping knows that the grocery bill gets bigger every month. Last weekend, I surveyed the Beef section at a local Walmart and found the following:
• Beef cuts with the USDA Choice label price between $12-$18 per pound.
• A primal loin, for example, costs $16.99/lb.
Next to Beef is the Pork section.
• A full slack of spareribs prices at $1.89/lb.
• This is back to the pre-Covid price level.
Why is beef so pricy? Will consumers get some relief as food inflation goes down? In this report, I attempt to find out what drives the beef/cattle price up.
The Cash Cattle Market
According to the National Daily Cattle & Beef Summary published by the USDA, Choice Beef averaged $301.79/cwt (per 100 pounds) nationwide on August 4th. Primal loin cutouts averaged $4.11/lb. This is so much lower than the retail price. But why?
The USDA reports transactions occurred at meatpackers, where cattle farmers sell their beef cows. The report shows the value chain throughout the packing process:
• Live Cattle: Steer (male cow), 187.55/cwt; Heifer (young female), $187.26/cwt;
• Beef Carcass: $284.86 (Choice);
• Primal Flank: $214.84 (Choice);
• Primal Rib: $457.54 (Choice);
• It also lists prices for Chuck, Round, Brisket, Short Plate, Trimmings, etc.
From the packing plant, beef goes through cold storage, wholesale, and retail distribution before consumers pick up their favorite meat at the grocery store.
During the inflationary period, labor and energy become more costly, driving up the cost of each stage of processing and distribution. Higher interest rates also raise the cost of business overhead. These together widen the price spread between live cattle and retail beef cutout significantly.
In the beef cattle value chain, it takes farmers two years to raise the cows, while processing and distribution take maybe two weeks to complete. However, farmers receive only about 20% of the final sales price.
The Cattle Cycle and A Shrinking Herd
Cattle cycle is the process in which the size of the national cattle herd changes over time, from low point to low point. The cattle cycle averages 8–12 years and is influenced by the cattle prices, input costs that drive producer profitability, the gestation period, the time needed for raising calves to market weight, and climate conditions.
If cattle prices and producer profits are expected to rise, producers may expand their herds; if prices are expected to decline, producers will reduce their herds by culling older cows and keeping fewer heifers to replace older cows.
Cow-calf producers’ response to price fluctuations may be delayed because of the lengthy gestation period for cattle relative to hogs and poultry. The total number of beef cattle in the United States is highly dependent on the stage in the cattle cycle.
Last month, the USDA reported that the latest herd inventory for all cows and calves was 95.9 million, down 3% year-over-year. Beef cow inventory was 29.4 million, also down 3%. The decline in beef cow supply is the main driver for higher beef prices.
Over the past 50 years, the US cattle herd has shrunk significantly.
• Inventory for all cows and calves peaked at 132 million in 1975. We have lost over 36 million cows or 27% of all cattle supply.
• Beef cattle inventory peaked at 45.7 million. We now have 2/3 of peak herd size.
A counter argument is that, with technology advancements, we need fewer cows for the same amount of beef supply. The production time gets shorter, and the cows gets bigger. People now have healthier diets and take in less red meat.
According to USDA data, per capita beef consumption was 63.3 pounds in 1960. It declined to 59.1 pounds in 2021, down 6.6%. But look at the huge population growth for people. The US had 203.2 million people according to the 1970 Census. US population grew to 331.4 million in the 2020 Census, up 63%. Beef demand clearly outpaced supply as US population grows.
Beef Export and Import
Interestingly, the US both exports and imports beef. In 2021, the US exported 3.43 billion pounds of beef while imported 3.35 billion pounds. Beef export was mainly higher-grade beef cutouts. And import was lower-grade beef for processing into ground beef.
The US used to be a net import country for beef. In 2020, China signed a trade agreement with the US and opened its vast market for US beef import. This resulted in China buying four times as much beef the following year.
More export reduces domestic beef supply. This is another factor driving up beef prices.
In conclusion, the days of lower priced beef are long gone. Beef prices are expected to remain high, even though food inflation goes down.
Cattle and Hog Spread Trade – A Revisit
How could we make use of this analysis? On May 15th, I published an idea about a spread trade between CME Live Cattle Futures ( NASDAQ:LE ) and Lean Hog Futures ( NYSE:HE ).
The 20-year chart shows that the price spread between live cattle (LE) and lean hog (HE) broadly stays in the range of $20-$60 per 100 pounds but could go up to as high as $100.
On May 12th, October cattle contract (LEV3) was quoted $166.2 per 100 lbs., while October hog contract (HEV3) priced at $77.425. Thus, the price spread was $88.775.
On August 4th, LEV3 settled at $183.10 while HEV3 was closed at $83.25. The spread has widened to nearly $100.
The Impact of Proposition 12
In 2018, California passed an animal welfare law called Proposition 12. It requires that breeding pigs be confined to a pen with no less than 24 square feet of floor space, allowing them to fully turn around in their living area.
Proposition 12 applies to not only hog farmers in California, but also any supplier selling hog and pork in the state of California. The hog industry fought hard but lost. The Supreme Court upheld the law in May, and it is finally taking effect in July.
The animal welfare law significantly increases the cost of hog production nationwide. Prices of live hog, pork cutout, ham and bacon shall all go up. However, as we are now in summer, a low pork consumption season, cash market price has not yet caught up.
In my opinion, the cost factor pushing pork prices up in the short run is greater than the supply-demand force that drives up beef prices in the long run. There may be room to short the cattle-hog spread, until pork prices stabilize in a new equilibrium.
A Short Spread trade entails selling 1 CME Live Cattle Futures and buying 1 CME Lean Hog Futures. Both contracts are based on 40,000 pounds of meat and require $1,600 in initial margins.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Inflation gone? I don't think so. Cattle futuresThis chart shows you everything you need to know about inflation. I was shopping yesterday and my steak cost $1/lb more than last month.
If Powell doesn't go .5% today, this blow up to new ATH, and inflation will force his hand in July. Inflation isn't going away any time soon, look at gold, oil, etc. Traders are pumping commodities every time they pump the stock market.
Keep in mind .25% today and ,25% in March is already priced in and this is headed to new highs. Note: weekly chart
LE1! Futures ( LE11 ), H4 Potential for Bullish ContinuationTitle: Live Cattle Futures ( LE11 ), H4 Potential for Bullish Continuation
Type: Bullish Rise
Resistance: 159.175
Pivot: 157.875
Support: 155.375
Preferred case: Looking at the H4 chart, my overall bias for LE1! is bullish due to the current price being above the Ichimoku cloud , indicating a bullish market. Expecting price to continue heading towards the resistance at 159.175, where the previous swing high is.
Alternative scenario: Price could head back down to retest the pivot at 157.875, where the 38.2% Fibonacci line is.
Fundamentals: There are no major news.
CattleCattle – Weekly Continuous: The gray vertical bars represent the expiration month of labeled contract and have prices of each contract as of today labeled. The 2019 low has provided a pivot for a parallel uptrend line (highlighted in yellow) that has acted as a strong magnet since moving up off the covid crash low. Any of the lines could act as Support or Resistance. Further support marked in gray, risk area marked in red, and opportunity area marked in green. Deferred contracts can use the uptrend/downtrend lines or highlighted areas as well…
April Cattle approaching Resistance/opportunity area, Risk is 128 – 132
Live Cattle Futures ( LE1! ), H4 Potential for Bullish TrendTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Trend
Type : Bullish rise
Resistance : 147.900
Pivot: 144.275
Support : 141.100
Preferred Case: The price is moving in a bullish trend on the H4. Price fell below the Pivot at 144.275, but quickly recovered and closed above it. If the bullish momentum continues, we can expect price to move towards the first resistance level at 147.875 (the 127.2% Fibonacci extension line).
Alternative scenario: Price could break the pivot structure and return to the first support level at 141.100, where the 38.2% Fibonacci retracement line is.
Fundamentals: No Major News
Cattle v Gold over 42 years....thoughts ?This is 42 years of gold v cattle futures, i found it intersting, was cattle not the better play ?
BREAKOUT WATCHLive cattle futures are on the verge of a technical breakout, something that we've been rooting for for some time now. The cash market remains firm, and the charts are getting more constructive.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Feeder Cattle Rally on Weaker Corn MarketsFeeder Cattle
Technicals (August): Feeder cattle were able to catch a rally yesterday, thanks in part to the corn market collapsing following a “neutral” USDA report. Though it was nice to see a rally, the recent price action relative to the sharp decline in corn has been less than impressive. Not that it has to be a 1:1 correlation, but we would have expected to be a little closer to the 180 neighborhoods. Stiff resistance comes in from 175.35-175.65. This pocket represents the 100 and 200 day moving average, along with what was previously (recently) trendline support. A conviction close above this pocket may be what the Bulls need to work back towards the upper end of the recent range.
Resistance: 175.35-175.65****, 176.80-177.075***
Pivot: 171.45 -172.40
Support: 169.40**, 167.325**
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Will Cattle Futures Rally to Meet the Cash Market?
Thursday’s Slaughter is estimated at 124,000. 2,000 more than last week, and 7,000 more than the same week last year.
Thursday’s Cutout Values
Choice: 264.00, Down .88 from the previous day.
Select: 240.57 Down .24 from the previous day.
Choice/Select Spread: 23.43
5 Area Average Cattle Price
Live Steer: 145.85
Live Heifer: 143.55
Dressed Steer: 234.01
Dressed Heifer: 233.98
Live Cattle
Technicals (August): August live cattle made new lows for the move in yesterday’s session but were able to recover and finish the last trading day of the month/quarter/half in positive territory. With the cash market remaining firm, some of the pressure may be attributed to technical selling and end of the month/quarter positioning. We remain optimistic that live cattle will be able to work back towards some of those key moving averages, north of 135.00.
Resistance: 134.85-135.25 ***, 135.975-136.60**, 138.75**, 140.275**
Pivot: 132.45-132.775
Support: 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Feeder Cattle Threaten a Technical Breakdown Feeder Cattle
Technicals (August): August feeder cattle futures broke below trendline support yesterday, which took prices into our 4-star support pocket, 171.45-172.40. All else held equal, this is a MUST HOLD pocket for the Bulls, a break and close below could open the door for a drop into the mid-160’s. We say “all else held equal” because tomorrow’s USDA report may have a big impact on price action that could negate short term technical.
Resistance: 175.50-176.125**, 176.80-177.075***
Pivot: 173.75-174.02
Support: 171.45 -172.40****, 169.40**, 167.325**
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Can Cattle Avoid the Death Cross?
Tuesday’s Slaughter is estimated at 126,000. Unchanged from last week and 5,000 more than the same week last year.
Tuesday’s Cutout Values
Choice: 267.14, Down 1.54 from the previous day.
Select: 243.31, Down 1.93 from the previous day.
Choice/Select Spread: 23.44
5 Area Average Cattle Price
Live Steer: 137.00
Live Heifer: 147.20
Dressed Steer: N/A
Dressed Heifer: N/A
Live Cattle
Technicals (August): August live cattle were lower on the session, closing at the lowest price since May 31st. Yesterday’s close was right in our first support pocket, 132.45-132.775. IF the Bulls fail to defend this pocket on a closing basis, we cannot rule out a further breakdown and retest of the May 31st low, 129.975. Though we remain optimistic, yesterday’s down day is just another notch on the belt for a market that hasn’t been able to get anything going for some time now. Th
Resistance: 134.85-135.25 ***, 135.975-136.60**, 138.75**, 140.275**
Support: 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
A Death Cross in Live Cattle?
Mondays Slaughter is estimated at 125,000. 1,000 more than last week and 6,000 more than the same week last year.
Monday's Cutout Values
Choice: 268.68, Up 3.70 from the previous day.
Select: 245.24, Up .22 from the previous day.
Choice/Select Spread: 23.44
5 Area Average Cattle Price
Live Steer: 144.55
Live Heifer: 141.88
Dressed Steer: 235.22
Dressed Heifer: 237.17
Live Cattle
Techncials (August): August live cattle futures broke lower yesterday, taking out the low end of support by .10 but then rebounding into the close. The rebound is encouraging for the Bull camp, but they must defend yesterday’s low on a closing basis to prevent a further decline to 129.975-130.725. On the resistance side of things, our pocket from 134.85-135.25 is the first hurdle for the Bulls to get out above. This pocket represents the 50 and 200 day moving average. Unfortunately, that 50-day moving average is crossing below the 200-day moving average. In technical analysis world, this would be considered a “death cross”. I’m sure you guessed by its label that is is perceived to be bearish. We don’t put much weight into it, but it should be a caution flag for the Bulls.
Resistance: 134.85-135.25 ***, 135.975-136.60**, 138.75**, 140.275**
Support: 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Live Cattle Consolidate Tuesday’s Slaughter is estimated at 126,000. 4,000 more than last week and 4,000 more than the same week last year.
Tuesday’s Cutout Values
Choice: 267.56, Up 1.06 from the previous day.
Select: 246.70, Up .31 from the previous day.
Choice/Select Spread: 20.86
5 Area Average Cattle Price
Live Steer: N/A
Live Heifer: N/A
Dressed Steer: N/A
Dressed Heifer: N/A
Live Cattle
Technicals (August): It was more of the same for live cattle, trading on both sides of the 100-day moving average for the fourth consecutive session. If the Bulls can chew through resistance from 137.90-137.95, we could (finally) see an extension into the April 25th gap, 138.75-140.275. On the support side of things, 134.85-135.40 is the pocket the Bulls need to defend. This pocket represents previously important price points, along with the 50 and 200 day moving average. A break and close below that pocket would be a dagger in the heart for the Bull camp as it could spur a retracement back to the 132 area.
Resistance: 137.90-137.95**, 138.75**, 140.275**
Pivot: 136.60
Support: 134.85-135.35***, 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
A Tailwind for Feeder CattleFeeder Cattle
Commitments of Traders Update: Friday’s CoT report showed Managed Money were net buyers of 1,354 futures/options through June 14th. This shrinks their net short position to 3,553. Broken down that is 10,436 longs VS 13,989 shorts.
Technicals (August): August feeder cattle futures were able to defend trend line support on Friday, the third time in five sessions that it was tested and held. That comes in at 171.65 today. On the resistance side of things, the gap from June 13th was partially filled last week, but remains open up to 174.025. Grain markets are sharply lower this morning which may act as a headwind for feeder cattle on the open.
Resistance: 173.75-174.02***, 175.50-176.125**, 176.80-177.075***
Support: 170.975 -171.65****, 169.40**, 167.325**
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Live Cattle Shrug Off Outside Market WeaknessThursday's Slaughter is estimated at 126,000. Unchanged from last week, but 5,000 more than the same week last year.
Thursday's Cutout Values
Choice: 267.16, Down 1.06 from the previous day.
Select 245.38, Down .30 from the previous day.
Choice/Select Spread: 21.78
5 Area Average Cattle Price
Live Steer: 144.10
Live Heifer: 143.22
Dressed Steer: 229.47
Dressed Heifer: 229.78
Outside Markets as of 6:15 AM
Dow Jones +195 points, Up .65%
S&P 500 +33 points, Up .89%
U.S. Dollar +.665, Up .63%
Live Cattle
Technicals (August): August live cattle were down on the session, but they were resilient in brushing off the carnage that was taking place in the equity markets. Most of our bias this week has been, cattle will go will equities go. The fact cattle were able to hold ground indicates to us that there is good underlying strength in the market as high temperatures and a stout cash market have kept a floor in the market this week.
Resistance: 137.90-137.95**, 138.75**, 140.275**
Pivot: 136.60
Support: 134.85-135.35***, 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Feeder Cattle Test Trendline Support. Will it Continue to Hold?Feeder Cattle
Technicals (August): August feeder cattle bulled back to trendline support (see chart below), which was defended into the close. Futures finished the session right near the 50-day moving average, 171.00. Grains were firm yesterday which may have added a headwind to feeders. Grains are firm again this morning which may keep that headwind in place on the open. If the Bulls cannot defend support, a drop back to Monday's low, 169.40, wouldn't be out of the question. On the resistance side of things, the gap from Monday is still intact, though partially filled on Wednesday, 173.75-174.025.
Resistance: 173.75-174.025***, 176.45-177.075***, 178.225**, 181.65-182.10****
Support: 170.55 -171.00****, 169.40**, 167.325**
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Daily Feeder Cattle Technical Update (6.12.22)
Feeder Cattle
Technicals (August): As with live cattle, feeder cattle were choppy, trading on both sides of unchanged only to finish the session near unchanged. There is a gap left from the Monday morning open, that comes in from 173.75-174.025. We would not be surprised to see this gap get filled, especially if the corn market cannot find its footing. Above that is the 100-day moving average at 176.45. On the support side of things, 170.25-170.725 is the pocket for the Bulls to defend. This represents trendline support from the May 23rd lows as well ass the 50 day moving average.
Resistance: 173.75-174.02***, 176.45-177.075***, 178.225**, 181.65-182.10****
Pivot: 171.40-171.925
Support: 170.30 -170.725****, 169.40**, 167.325**
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Daily Lean Hog Technical and Fundamental Update (6.12.22)
Lean Hogs
Technicals (July): July lean hogs attempted to get out above technical resistance from 106.75-107.75 but failed to sustain the early momentum into the afternoon session. If the Bulls can chew through and close above this pocket, we would look for an extension towards the mountain of resistance from about 111.00-112.70. This pocket includes trendline resistance from the March 31st highs, the 50 and 100 day moving average, and other previously important price points. On the support side, 103.35-103.70 is the pocket the Bulls must defend.
Resistance: 106.75-107.75*** 110.50-111.625***, 114.00-114.825***
Support: 103.35-103.70****, 101.30-101.60**, 97.375-98.00****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Daily Live Cattle Fundamental and Technical Outlook (6.12.22)Tuesday’s Slaughter is estimated at 122,000. 4,000 less than last week, but unchanged from the same week last year.
Tuesday’s Cutout Values
Choice: 269.44, Down 1.10 from the previous day.
Select: 246.82, Down .63 from the previous day.
Choice/Select Spread: 22.62
5 Area Average Cattle Price
Live Steer: 141.72
Live Heifer: 143.00
Dressed Steer: 225.58
Dressed Heifer: 226.00
Live Cattle
Technicals (August): Tuesday was mostly a nothing burger, with futures trading on both sides of unchanged, only to finish the session near unchanged. As mentioned in yesterday’s report, the outside markets will be the driver, ahead of today’s Federal Reserve announcement. The market is pricing in a .75% rate hike. The announcement will be at 1:00pm CT and a press conference at 1:30pm CT will follow.
Resistance: 136.025-136.625***, 137.90-137.95**, 138.75**, 140.275**
Pivot: 135.10-135.475
Support: 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Live Cattle Fundamental and Technical UpdateMonday’s Slaughter is estimated at 125,000. Unchanged from last week, but 8,000 more than the same week last year.
Monday’s Cutout Values
Choice: 270.54, Down .78 from the previous day.
Select: 247.45, Down 1.44 from the previous day.
Choice/Select Spread: 23.09
5 Area Average Cattle Price
Live Steer: 140.14
Live Heifer: 138.35
Dressed Steer: 226.03
Dressed Heifer: 225.95
Live Cattle
Technicals (August): August live cattle got taken to the woodshed yesterday, along with nearly every other market out there as a risk-off sentiment fed on itself ahead of this week’s Federal Reserve meeting where the chances of a .75 rate hike went from 25% to 94% over the span of one trading session. As painful as yesterday may have been, it prices in the bearishness that comes with a more rapid rate increase and leaves room for outside markets to rally if the Fed only comes in with a .50 hike. If the Fed hiked rates a full point, that would obviously be another story. Needless to say, outside market money flow and sentiment will be a key catalyst through tomorrow’s Fed meeting.
Resistance: 136.025-136.625***, 137.90-137.95**, 138.75**, 140.275**
Pivot: 135.10-135.475
Support: 134.40-135.10***, 132.45-132.775**, 129.975-130.725****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Feeder Cattle Need to Defend Support to Keep Momentum
Feeder Cattle
Commitments of Traders Update: Friday’s CoT report showed Managed Money were net buyers of 3,798 futures/options contracts, through June 7th. This shrinks their net short position to 5,472. Broken down, that is 10,900 longs VS 16,372 shorts.
Technicals (August): August feeder cattle retreated on Friday after failing against technical resistance, which we had outlined in previous reports as 176.75-177.075. This pocket represents previously important price points and the 100-day moving average. If the Bulls can eventually chew through this pocket, it would open the door for a potential run back near 182. On the support side of things, our first pocket from 174.00-174.30 remains intact after holding on Friday’s pullback. If that pocket gives way, we could retrace to last week’s breakout point and the 50-day moving average, 171.50-171.925.
Resistance: 176.75-177.075***, 178.225**, 181.65-182.10****
Support: 174.00-174.30***, 172.90**, 171.50-171.925****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
