Futures Market recap – BrokersEDGE 3-6-18

Cattle Commentary: The battle between higher beef prices and higher production continues with the later seemingly holding an edge right now. Cattle markets started the day on strong footing but gave up ground through the back half of the session. April fats finished the day down .425 at 122.80, trading in a range of 2.375. March feeders closed .725 lower at 144.425, trading in a range of 2.25 for the day. Early bids came in at 124 with offers starting at 128; there was talk of some cash trade in Texas at 126, this is steady with last week’s trade. Caution flags that were raised over the past two weeks continue to linger as the market fails to hold a rally and could lead to a technical breakdown (see technicals below). Outside markets are seeing volatility in the open of the overnight session due to Gary Cohn resigning, the top economic advisor to the President. If we hadn’t already gotten tax reform this would be a bigger concern, this looks like a bit of a knee jerk reaction at first sight. Over the last month we have been painting the outside markets as a sell first ask questions later type of market in our Morning Express. Boxed beef managed to inch higher yet again today.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 223.35/ 215.20

Change from prior day: /.12 / .36

Choice/Select spread: / 8.15


Cattle Technicals

Live Cattle (April)

Cattle futures started the day with a bang on follow through momentum from yesterdays close, printing their highest price of the month at 124.825. The rest of the trading session was like a slow-motion train wreck for bulls as momentum faded and long liquidation followed. The tides have certainly started to shift over the last two weeks as the bulls have failed to hold water with every attempt at a rally. If the market breaks and closes back below technical support, we could see accelerated selling pressure press prices down towards 120.00-120.25; this pocket represents the 200-day moving average along with the 50% retracement (middle of the range) from the August lows to the November highs.

Resistance: 123.40-123.80**, 125.45-125.675***, 127.20-127.95**

Support: 121.90-122.45***, 120.00-120.25**, 117.90-118.05****


Feeder Cattle (March)

March feeders made a run towards first resistance which we had outlined as 146.45-146.85, but the bulls were not able to get anything going above here to stage a breakout. The inability to work higher invited the sellers back into the market and pressed prices back below the 200-day moving average. Recent price action favors the bears in the near term; first technical support tomorrow comes in from 142.75-143.50. A break and close below opens the door for a slide down to 139.85. First resistance for tomorrows session comes in from 145.525-145.60.

Resistance: 145.525-145.60**, 146.45-146.85***, 147.525-148**, 149.40 150.90****

Support: 142.75-143.50**, 139.85-140.30***, 138.30***


Lean Hog Commentary and Technicals (April)

Lean hog futures made a run at filling the gap from 69.50-69.80 but ran out of steam to get the job done. Futures faded through the day with the April contract closing .625 lower at 68.15, this after trading in a range of 1.20. First technical support for tomorrows session comes in from 67.825-68.025. If the bears break this barrier we could see the long liquidation continue and press prices back towards the August 31st lows of 65.05.

Resistance: 69.50-69.80***, 71.15-71.35**, 72.60-73.15****

Support: 67.825-68.025**, 66.875**, 64.85-65.05***, 63.50-63.75**


Euro (March)

Session close: Settled at 1.2414, up 78.5 ticks

Fundamentals: The Euro put in a strong session today as optimism gathers behind Thursday’s ECB meeting and trade tariff news weighs on the U.S Dollar. Markets have shaken off the Italian election deadlock placing a strong focus on a coalition formed in Germany. The real news this evening is the resignation of President Trump’s top economic advisor Gary Cohn and the Euro opened only slightly stronger. However, it did gain nearly a penny on Tuesday’ session. Eurozone GDP data is due tomorrow at 4:00 am CT. The private ADP job survey is due at 7:15 am CT. Atlanta Fed President Bostic speaks at 7:00 am CT and NY Fed President Dudley speaks at 7:20.

Technicals: Despite the lower low last week, the daily chart remains extremely constructive and in part because of the strength from Friday through today. Price action is facing a very strong two-star key resistance level head on, about as close to three-star as we can get. Traders should manage risk by rolling up stops or using put protection ahead of Friday or outright taking profits on longs ahead of tomorrow’s close. The bulls will hold the clear upper-hand as long as previous resistance which is now support at 1.23715-1.2382 holds.

Bias: Bullish/Neutral

Resistance: 1.2433-1.2457**, 1.2496*, 1.25795-1.2608***

Support: 1.23715-1.2382**, 1.2331-1.2337**, 1.2290*, 1.2209-1.2230***, 1.2114-1.21405**, 1.2004***


Yen (March)

Session close: Settled at .9421, down 15 ticks

Fundamentals: After a solid session Tuesday, the Yen reopened for Wednesday’s session up more than 0.5% on the news that Gary Cohn resigned. This creates yet another bullish scenario for the Yen along with increased volatility in equity markets. More domestically focused, GDP data is due out of Japan tomorrow and traders prepare for Thursday night’s Bank of Japan policy meeting. Foreign Reserves data is due out of Japan at 5:45 pm CT and Leading Index data is due at 11:00 pm CT.

Technicals: Price action settled right at the pivot level and despite the pullback from new swing highs, this is constructive. First key support held, and we adjusted it to align with today’s session low. The surge higher tonight brings another test to rare major four-star resistance at .9480-.9491 and a close out above here is extremely bullish and could pave the way for 1.00.

Bias: Bullish

Resistance: .9480-.9491****

Pivot: .9429

Support: .9399-.9404**, .9310*, .9246-.9260***, .9170**, .9073-.9094***


Aussie (March)

Session close: Settled at .7818, up 57 ticks

Fundamentals: Risk-off has swept through markets on the reopen tonight after the Gary Cohn news. While this does not bode well for the U.S Dollar, it doesn’t either for risk-on currencies such as the Aussie. The Aussie had put in a strong session Tuesday and despite weak Retail Sales and the RBA leaving rates unchanged as expected, the currency traded well off U.S Dollar weakness. RBA Governor Lowe spoke late afternoon U.S time and there are conflicting reports out of Australia; one negative and one upbeat. We see price action trading higher into the electronic close. GDP data is due tonight at 6:30 pm CT

Technicals: The new session weakness should leave traders on the sidelines until further clarity. While price action traded to a high of .7842 intraday today, it retreated and managed to only settle marginally above major three-star resistance at .7805-.7815; a level needed to close out above in order to break the recent downtrend. Tonight’s sharp reversal puts the Aussie back against major three-star support. Both levels create a range in which a close out above or below will encourage a directional move.

Bias: Neutral

Resistance: .7805-.7815***, .7882-.7893**, .7987-.7991**, .8046-.8051***, .8135-.8151****

Support: .7733-.7757***, .7640**


Canadian (March)

Session close: Settled at .77525, up 57 ticks

Fundamentals: The Canadian was able to grind out a rally today on Dollar weakness and Crude strength along with hope that a NAFTA deal will help the tariff talk. However, the Gary Cohn resignation quickly sparked a risk-off trade, and this coupled with a build in API Crude inventories has immediately sent the Canadian down nearly 0.5%. Tomorrow is a big day for the currency as Trade Balance and Labor Productivity data is due at 7:30 am CT. The big even though is the Bank of Canada monetary policy meeting at 9:00 am CT. Though we do not imagine anything near a hawkish tone, the sentiment is already so negative that we could see a short covering rally.

Technicals: Today’s settlement regained what is now major three-star resistance and reinvigorated hope in whatever shreds of a bull camp are left. The reversal on the open took all of that away instantly. The path of least resistance remains lower and the only level we see is at .7550.

Bias: Neutral/Bearish

Resistance: .7752-.7787***, .7881-.7913***

Support: .7550***


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