Live Cattle
August Live Cattle futures responded well to Friday’s Cattle on Feed report in yesterday’s session. We were encouraged to see the strength hold through the session, as opposed to a strong open that fizzled away all day; something we have seen a lot of recently. Some states are laying the groundwork to reopen in May, including restaurants. Though the talk is it will start with 25% capacity restrictions, this is a step in the right direction.
Technical Outlook
The market remains in the middle of a range that has been established over the last 3 weeks. The consolidation has been welcomed, providing several opportunities for shorter-term traders. Technical support and resistance remain intact, from yesterday’s report. Significant support for the August Live Cattle futures contract comes in from 86.375-87.00, the bulls MUST defend this pocket. A close below could lead to a retest of the contract lows. If the bulls can defend this pocket, we could continue to see the bottoming process take place, forming an inverse head and shoulders on the daily chart. Significant resistance comes in from 92.525-93.675. Consecutive closes above here likely sparks short covering and takes us back above the psychologically significant 100 level.
June
Resistance: 85.35**, 88.125-89.25****
Support: 79.85-80.70****, 76.60***
August
Resistance: 92.525-93.675****, 100.975-104.475***
Pivot: 89.65-90.70
Support: 86.375-87.00****, 84.575-85.175**, 80.50****
Feeder Cattle (August)
August Feeder Cattle futures opened higher, but didn’t get a lot of follow through, through the session. The market is threatening to breakout above the top end of the wedge, which could lead to a bigger directional move. 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 are 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. We believe the bull camp has a slight advantage on the chart, but they need to see a move above resistance soon. A failure will show a lack of conviction and the bears could pounce.
Resistance: 130.30-131.225***, 134.10-135.10**, 137.70-139.125****
Support: 123.475-124.30***, 121.00-121.65****, 118.825**
Lean Hogs (June)
June Lean Hog contracts traded limit up, giving us expanded limits today, 5.50. Early indication is for additional momentum today. 57.15 has been the target, this represents the April 8 highs. Could the market continue to breakout above this barrier? Absolutely, but if you’ve able to ride the wave higher, this is the area to consider reducing some of that exposure.
Resistance: 57.15***, 59.325-60.35****, 64.25-65.45***
Support: 51.325-51.625**, 48.05-48.475**