Live Cattle (August)
Live Cattle futures made closed at the highest level in nearly a month as we continue to move past the peak panic”stage of Covid-19. Friday’s Commitment of Traders report showed funds bought net 2,658 contracts, expanding their net long position to 4,464. This is a very small position for them, so if things look like they are turning for the better, they have the power to add aggressively. We don’t foresee them to retest the low end of their most recent net short position.
Technical outlook: The market tripped stops above the top end of the range and finished Friday’s session near our 4-star resistance pocket, 92.525-93.675. Though we remain optimistic on futures prices, the top end of the range should be a spot to consider reducing, not adding aggressively. First support today comes in from 89.05-90.025. Pullbacks will be buying opportunities and would consider buying a pullback to this level, on the first test.
Resistance: 88.125-89.25****, 91.55**, 92.075-93.325****
Support: 79.85-80.70****, 76.60***
Resistance: 92.525-93.675****, 95.10-95.30***, 99.85-100.975****
Support: 89.05-90.025***, 86.375-87.00****, 84.575-85.175**, 80.50****
Feeder Cattle (August)
August Feeder Cattle futures ripped higher at the end of last week but finished the session near unchanged after failing against our 3-star resistance pocket, 130.30-131.225. 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, so we would be looking to buy a pullback to first support.
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 Hogs have been on fire since bottoming out in the middle of April, rallying over $20! Our significant resistance pocket comes in from 63.25-64.25. This pocket represents the gap from March 27and the 50-day moving average. We continue to believe we will see the market start to develop a range in the coming week or two. We would be waiting 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*