Commodity Markets wrap up 6-11-18

Last Trades:

LEQ8: -1.375 at 104.40, trading in a range of 2.90

LEV8: -1.075 at 107.125, trading in a range of 2.50

GFQ8: -1.325 at 145.95, trading in a range of 3.10

GFU8: -1.05 at 147.375 trading in a range of 2.925


Cattle Commentary: Last week’s cash trade caught a bid at the end of the week, coming in 4-5 higher from the previous week. This lifted the spirit for bulls into the weekend, but when we opened up this morning those hopes were somewhat deflated. The market traded both sides of unchanged before rolling over into the afternoon session. We were on RFD-TV this morning discussing the markets and mentioned the fact that we couldn’t rally on bullish news should be a caution flag for bulls. We believe that is what ended up happening, the inability to achieve a technical breakout on bullish fundamentals led to some squaring up which eventually fed on itself as the volume picked up.


PM Boxed Beef / Choice / Select

Current Cutout Values: / 225.13 / 202.80

Change from prior day: / (1.08) / (.38)

Choice/Select spread: / 22.33


Tech Talk

Live Cattle (August)

Live cattle futures tested the top end of the range from late April and early May but failed to gain ground to encourage additional momentum. The inability to breakout led to profit taking from those who were able to buy at better prices in the back half of last week’s trade. There is some support coming in from 103.30-103.65, this pocket represents the 50-day moving average and trend line support from the May 18th lows. If you are bearish and short, this is where you would want to consider reducing. If you’re bullish this is where you might consider dipping your toes in. Ultimately, we believe the market will settle into a more defined range, so we are looking to be more patient for a test of 102.20-102.40.

Resistance: 105.20-105.35***, 106.50-106.675**, 107.40-107.80****

Support: 102.20-102.40***,100.80-101.225**, 97.625-98.20****


Feeder Cattle (August)

August feeder cattle pin ponged between some key technical levels, finishing the session near the low end of the day’s range. First support tomorrow comes in from 145.30-145.50, this pocket represents today’s lows and the 50% retracement (middle of the range) from this year’s trading range. A break and close below this pocket will likely encourage additional pressure and take prices down towards 143.00-143.75. This pocket represents a key retracement on the year along with the 50-day moving average. The bears want to defend 146.70-146.80 in tomorrow’s session, this pocket represents the 100 and 200 day moving average. As with the fat cattle, we feel that the market will work into a more defined trading range over the intermediate term.

Resistance: 147.80-147.95**, 149.075-149.50**, 150.725-151.425***

Support: 145.30-145.50**, 143.00-143.750****, 141.00-141.15**


Lean Hog Commentary and Technicals (July)

Lean hog futures rallied hard in the back half of last week’s trade, leading to a firmer open to start this week’s trade. That momentum ran out of gas after failing to attract new buyers at prices not seen since the beginning of March. The inability to hold ground led to long liquidation into the afternoon session. July futures finished the session down 1.125 at 79.60, trading in a range of 3.00. We would not be surprised to see this pressure continue into tomorrow’s session as we expect the market to settle into a more defined range. First support tomorrow comes in from 78.625-78.80, this pocket represents today’s lows and the 50% retracement from the year’s range. A breakdown below opens the door to 76.825-77.20, this pocket represents a key retracement and the gap from June 5th.

Resistance: 81.25-81.65**, 85.75**

Support: 78.625-78.80**, 77.20-77.50***, 75.20****


Euro (June)

Session close: Settled at 1.1793, up 16.5 ticks

Fundamentals: This is the biggest week of the year and the Euro started off on solid footing. It is still having difficulty getting through technical resistance but firm comments from Italian Finance Minister that they will not leave the Euro were supportive. Today’s economic calendar was bare outside of Industrial Production and Manufacturing data from the U.K. These both missed and while the Euro gained against the Pound, this data likely weighed on the Euro versus the Dollar just a bit as the session unfolded.. French Non-Farm Payrolls are due at 12:30 am CT. German ZEW Economic Sentiment at 4:00 am CT will be a crucial read tomorrow, the last two months were the lowest since November 2012 and tomorrow’s read is expected to worsen. U.S CPI is due at 7:30 am CT and all eyes must be on this. There is a 30-year Bond auction at noon CT and the Federal Budget balance at 1:00 pm CT.

Technicals: Price action has struggled mightily against first key resistance at 1.1834-1.1855. We remain Bullish in Bias, however, the recovery bounce has been achieved. This week’s direction will be very fundamentally driven, but the levels will be key when they are tested. Amidst weakness on Friday, major three-star support at 1.1728-1.1745 held like a champ with a low of 1.1733. Heading into such a fundamentally driven week, these are the ranges traders must play as first key resistance was tested within 24 trading hours. We will remain Bullish in Bias as long as that major three-star level holds on a closing basis. A move out above first key resistance should bring the tape to major three-star resistance at 1.1973-1.2025, a massive level.

Bias: Bullish/Neutral

Resistance: 1.1834-1.1855**, 1.1973-1.2025***

Support: 1.17775-1.17815*, 1.1728-1.1745***, 1.1687*, 1.1628-1.1649**, 1.1474-1.15605****



Yen (June)

Session close: Settled at .9093 down 45.5 ticks

Fundamentals: The Yen has been a casualty to record setting equity markets, rising yields and the belief that the Bank of Japan will be the odd one out this week who remains more dovish. Tomorrow’s U.S CPI could really set the expectations for the Fed on Wednesday while the ECB has already said it will discuss changing their policy statement to tape. The Bank of Japan though is set to leave things unchanged, however if there’s one thing we’ve learned over the years, its that the Bank of Japan can easily surprise one-sided sentiment. First this week, President Trump meets with North Korean dictator Kim Jung Un this evening and any piece of bad news will encourage buying in safe-havens such as the Yen. Additionally, equity markets have faltered after each FOMC Meeting this year, strong CPI data tomorrow will strengthen the Dollar but as the week unfolds, a weaker equity market would also encourage buying in the Yen. Please do not get us wrong, we are not sitting here Bullish the Yen, we are merely giving the many reasons the market seems to be discounting. Machine Orders data out of Japan last night blew out expectations. PPI data is due tonight at 6:50 pm CT.

Technicals: Today’s weakness was very much technical. Friday’s price action failed directly at major three-star resistance. This level aligns with the 200-day moving average and has been a benchmark for us; above here we can then make the argument to become Bullish in Bias and below here the bears are in the driver’s seat. Price action closed on the lows and at first key resistance, a move below here could accelerate the selling.

Bias: Neutral

Resistance: .9158-.9168***, .92285-.9230**, .9303-.9315***

Support: .9075-.9095**, .89975**, .8865-.8900****



Aussie (June)

Session close: Settled at .7605 up 4 ticks

Fundamentals: The Aussie was our #1 Tradable Event last week and if you followed us you surely had opportunities to capitalize. We remain long-term upbeat on the Aussie and believe there is tremendous room to the upside, in the long-term. First and foremost, the RBA is likely to hike rates rather than cut rates and once they telegraph a more hawkish policy shift in the coming months we should see the Aussie appreciate quickly. In the near-term though, this week will be extremely volatile. In a choppy trade we could see downward pressures if the Fed is more hawkish than expected and/or stocks sell off. Still, by the end of the week we believe the Aussie should have shrugged of such volatility; stay nimble. Tonight, Home Loans and Business Confidence are due at 8:30 pm CT.

Technicals: Price action is holding well at major three-star support. It struggled to move out above firs key resistance last week but as we said above we remain long-term upbeat; major three-star resistance at .7757-.7774 should be attainable in the intermediate-term. However, a close below major three-star support due to U.S Dollar strength will put the Aussie on its back foot for a few sessions.

Bias: Bullish

Resistance: .7644-7660**, .7757-.7774***,

Support: .7581-.7607***, .7532-.7545**, .7470-.7489**, .7413**, .7315-.7329***



Canadian (June)

Session close: Settled at .7701 down 31 ticks

Fundamentals: The G7 Summit went as one would have expected; little to no headway as President Trump kept his hardline stance on tariffs and fair trade. However, things got worse for the Canadian Dollar after President Trump fired back at Prime Minister Trudeau for his comments on Trump’s trade stance. The currency quickly traded lower on Sunday night. Traders can also point to this weakness as a delayed reaction to a poor jobs report Friday on hopes of a better outcome from the G7. With nothing to write home about, the Canadian lost ground. The Bank of Canada is not participating in the central bank extravaganza this week and after such poor data last week, it’s a good thing for anyone thinking about buying; the bank could only be more dovish at this point. Tomorrow’s U.S data and price action in Crude Oil will push the Canadian around.

Technicals: The Canadian has battled fairly well at the .7700 mark all things considered. We remain Neutral given how constructive this battle has been given the weak fundamentals. However, could only make a case for being long above .7790.

Bias: Neutral

Resistance: .7790**, .7845-.78615**, .7891-.7919***

Support: .7699-7718**, .7633***


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