Meat Processing Issues Keep a Lid on Live Cattle Futures

April 22, 2020 09:20 AM
Intraday trading opportunities in Live Cattle contracts
June Lean Hog futures need to repair technical damage
Meats Market Update

Meats Market Update

Estimates for Friday’s Cattle on Feed report 

On Feed: 94.8%

Placed: 77.9%

Marketed: 112.1%


Live Cattle (June)

June live cattle took some heat yesterday but manage to close off the lows. There was some talk of cash coming in at 95, much of that already priced into the market with futures at 84. We’re seeing meat packing plants in the headlines more and more, that could keep the bull camp on their heels, and likely keep a lid on the near-term upward mobility. We are optimistic that things will get better, but have been keeping things a lot tighter, in terms of position sizing and time frame. 

First technical support comes in from 79.85-80.70. The bulls MUST defend this pocket, a break and close below leaves the door open for a retest of the contract lows, 76.60. On the resistance side of things, 85.35 is the first barrier. If prices can chew through this area, we could see an extension towards 88.125-89.25. 

Bottom Line: This has developed into a tradable market again, knock on wood. There have been intraday opportunities for both sides, we expect this to continue. If you want to be long for the long term, consider an options strategy or deferred contracts for a core position.

Resistance: 85.35**, 88.125-89.25****

Support: 79.85-80.70****, 76.60***


Feeder Cattle (August)

Feeder cattle opened lower but managed to rally into the afternoon session, a positive development for the technical landscape. Technical resistance today comes in from 130.30-131.225. These are wider ranges than we typically like to rely on, but that’s the environment we’re in. If the bulls can achieve consecutive closes above this pocket, we believe that would open the door for a retest of the March 25 highs, 139.00. On the support side of things, 121.00-121.65 is a significant pocket. A close below here could take us to the gap from April 6, 118.825.

Resistance: 130.30-131.225***, 134.10-135.10**, 137.70-139.125****

Support: 123.475**, 121.00-121.65****, 118.825**


Lean Hogs (June)

June lean hogs are trying to form a rounded bottom but have a lot of work cut out for them to repair the technical damage. We did close the gap from April 9, yesterday, that’s a start. The bulls need to see consecutive closes above here, 49.175. If they can achieve that, then we could see an extension towards The April 8 highs. A failure here spells disaster and likely takes us back to the lows.


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