Futures were quiet for most of yesterday’s session, then launched roughly 1.00 higher in the final minute of trade. We would view this as end-of-month position squaring from funds, who have had a bearish tilt on the market for an extended period of time. Cash trade has been relatively quiet this week, with relatively steady prices, for what has been traded.
If you have been watching the pre-market livestock markets over the last month (6:00 am CT- 8:30 am CT), you’ve probably noticed that they're often quoted as limit-up or limit-down. Yesterday showed limit down, up until the opening bell. Right now, we are showing limit down, again. We did reach out to CME Group and filed a complaint yesterday. This is a deceptive practice that alters early morning order-flow for honest participants. If the party doing this is within the guidelines, perhaps the guidelines need to be revisited.
August Live Cattle futures sprang into our 4-star resistance pocket at the close, we have had that pocket defined as 92.525-93.675. This is the top end of the recent range, consecutive closes above this pocket could trigger another wave higher. With that said, the top end of the range is where you should consider reducing, not buying new positions.
Support: 79.85-80.70****, 76.60***
Resistance: 92.525-93.675****, 100.975-104.475***
Support: 86.375-87.00****, 84.575-85.175**, 80.50****
Feeder Cattle (August)
Feeder Cattle futures remain range-bound but feel poised for a bigger directional move — we are leaning on that being higher — as that range continues to tighten up. Resistance 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, 123.475-124.30 is the first pocket the Bulls need to defend. A close below here could lead to a bigger pullback. 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)
Good exports and strong technical momentum helped lean hogs regain some of the lost ground from the previous session, taking us to the highest close since March 31. First resistance comes in at 60.775, the next and more significant resistance pocket comes in from 63.25-64.25. This pocket represents the gap from March 27 and the 50-day moving average. We continue to believe we'll see the market start to develop a range in the coming week or two. Wait for that to happen before getting aggressive in trading this mustang.
Resistance: 60.775**, 63.25-64.25****
Support: 54.775-55.275**, 51.325-51.625***