Last Trades
LEJ9: -.75 at 128.925, trading in a range of 1.05
LEM9: -.775 at 120.175, trading in a range of 1.125
GFH9: -1.625 at 142.30, trading in a range of 1.475
GFJ9: -1.85 at 145.85, trading in a range of 2.025
Cattle futures trading Commentary: The bulk of cash cattle last week checked in at 125 live and 205 dressed, steady with the previous week and a bit of a disappointment for the perma-bulls. Friday’s Cattle on Feed report was as follows: On-Feed 100%, Placements 95%, Marketings 103%; this was right in line with expectations and like cash trade, a bit of a disappointment. These two factors erased the gains from Friday afternoon. Friday’s Commitment of Traders report showed funds bought 6,587 futures through March 5th, extending their net long position to 129,163 contracts. This is a lot of length for the funds, leaving risk open to long liquidation.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 227.36 / 219.63
Change from prior day: / 1.23/ .85
Choice/Select spread: / 7.73
April Live Cattle futures trading
Cattle futures gave back the unwarranted pop from Friday afternoon after rather blah fundamentals late Friday. Last week we talked about the trendline from the November lows coming in and offering technical support that continues to grind higher, testing and holding again today. With the funds having good length here, we have a hard time seeing them getting significantly more aggressive. We continue to believe that there will be opportunity on both sides of the market but favor the sell side here to start the week. First support this week comes in from 128.10-128.50, a close below here could be the spark to trigger fund selling.
Resistance: 129.475-129.65***, 130.45-131.00**, 134.55****
Support: 128.50-128.60***, 127.50**, 125.00-125.30***
April Feeder Cattle futures research and news
Feeder cattle gave back gains from Friday’s surge higher but managed to find support near 145.20-145.80, this pocket contains the 50, 100, and 200 day moving average. Those moving averages being s tight confirms what we have been saying for a few months now, that being that we have been in a range bound trade. Smack dab in the middle of that range, we don’t have a whole lot of conviction on either side here. IF we worked closer to 144, we would be willing buyers on the first test. On the flip-side, resistance comes in near 148.
Resistance: 147.325-147.85***, 148.50**, 150.20-150.925****
Support: 143.50-143.75***, 140.35-141.30****
April Lean Hogs futures
April lean hogs found follow through momentum from Friday’s limit move. The market stalled out near 62.85 which represents the 50% retracement (middle of the range) from the contract highs in November to the contract lows in February. Also, today’s high print narrowly filled a gap from January 24th. This is an area where we could start to see the market consolidate more and take a breather before resuming the recent uptrend or retreating back. Friday’s Commitment of Traders report showed funds are still net short 9,186 futures (through March 5th).
Resistance: 62.85-63.50***, 65.45-65.90***
Support: 61.70**, 60.00-60.15***, 57.25****
March Euro dollar trading
Fundamentals: The Euro fell out of bed last week after the ECB went full dove. However, a questionable U.S Nonfarm Payroll report amidst a ‘patient’ Fed backdrop helped stabilize the tape ahead of the weekend (weakened the Dollar). Fed Chair Powell has been on the prowl making the rounds, speaking Friday night and on CBS’s 60 Minutes Sunday night. He’s continued to reiterate the Fed’s ‘patient’ approach but making sure to emphasize the U.S economy is in a “good place”. He points to China, Europe, trade tensions and Brexit as the formidable headwinds. He speaks again tonight at 6:00 pm CT and this time on the heels of a January Retail Sales report that bounced back from the depths of December. The only problem is that December’s floor was lowered in the revisions. Since the Fed has pounded the table with their newfound dovish rhetoric there is no fear that they will have to hike rates anytime soon. In fact, going out to December, there is a 14.2% chance their Target Rate will be cut by 25 basis points with a 0% probability they hike this year. Because of this, Friday’s poor job growth was the headline and strong wage growth which typically steals the show was swept under the rug. This truly ups the ante for tomorrow’s CPI read at 7:30 am CT. The Fed can be ‘patient’ because they have no fear inflation will get out of hand since it stalled last year. If inflation begins to show up, this may force their hand. However, if tomorrow’s CPI misses, the Euro can firmly bounce. Fed Governor Brainard speaks at 7:45 am CT.
Also, the British Pound must be on your radar. It has reversed sharply from the Sunday night low after U.K Prime Minister May went to Brussels to meet with EU Commission President Juncker in order to obtain more ground. If tomorrow’s vote passes, look for a substantial rally in the Pound which would lift the Euro. A rejection would likely lead to a vote Wednesday on whether the U.K leaves the EU without a deal. Also, from the U.K is GDP, Manufacturing Production, Industrial Production and Trade Balance all at 4:30 am CT.
Technicals: The Euro is attempting to stabilize from last week’s bloodbath. On a positive note, it did not close below the previous 1.12455 low and furthermore was buoyed by the long-term retracement level of 1.1213. We now have a rare major four-star support aligning these two levels and a weekly close below here should accelerate selling that could easily get down to 1.1085. The bulls must work step by step to neutralize the tape and the first hurdle comes in at 1.1281 with major three-star resistance above aligning with Thursday high before the drop-off at 1.13285.
Bias: Neutral
Resistance: 1.1281**, 1.1311-1.13285***, 1.1377-1.13935**, 1.1434-1.1447***
Support: 1.1213-1.12455****, 1.11845**, 1.1120*, 1.1085***
March Yen futures news
Fundamentals: The Yen rallied well into Friday’s Nonfarm Payroll report after Chinese Exports fell 20.7% YoY and German Factory Orders contracted much more than expected. Furthermore, the Yen spiked to the highest level in more than a week after the U.S only added 20,000 jobs in February. However, that was the pinnacle for to the currency on the week. On the bright side, it has held ground near this level very well despite the immediate technical headwinds and the rip back in risk-assets to start the week. BSI Large Manufacturing data is due at 6:50 pm CT.
Technicals: The Yen is showing signs of life, but we must close above our pivot level of .9002-.9013 which aligns with the continuous 200-day moving average in order for the technical landscape to become favorable once again. There are strong waves of overhead resistance after that and we look to major three-star resistance at .9092-.9129 as a level where the Yen would become very bullish out above. Through last week’s pullback, first key support did hold, and we find that constructive for now.
Bias: Neutral/Bullish
Resistance: .90435-.9049**, .9092-.9129***
Pivot: .9002-.9013
Support: .8919-8931**, .88355-.8845***
March Aussie dollar futures news and research
Fundamentals: The Aussie has been surprisingly stable despite the extremely poor data out of China early Friday morning. And then again, the broader risk-environment has held in very well and especially so after today’s ramp. The Aussie has been quietly trending lower since peaking on January 31st but now finds itself at unchanged on the year and a bit of an inflection point given such. Tonight, we look to a key read on Home Loans and NAB Business Confidence at 7:30 pm CT.
Technicals: Price action was met with support aligning with the January 3rd reversal bar. This has buoyed the tape but after breaking below a shelf of support, this shelf is now major three-star resistance. We fid the Aussie vulnerable below .7082-.7117 and a move out above here could begin to favor the bulls.
Bias: Neutral
Resistance: .7082-.7117***, .7152**, .7202-.7210**, .7278- .7300***, .7407****
Support: .7001-.7024***, .6825***
March Canadian dollar futures news and research
Fundamentals: The Canadian tried to rally on Friday’s strong jobs report out of Canada that showed a surprise 55,900 jobs created when only 300, yes 300, were expected. The only thing more surprising than that massive read was that the Canadian barely lifted and still hasn’t gotten out above the spike high from the release. This may have something to do with the lingering of an abysmal Ivey PMI read on Wednesday and a Bank of Canada that could find themselves needing to cut rates. Tomorrow’s U.S CPI will lead and there are no indicators out of Canada.
Technicals: The other factor holding the Canadian back is now strong overhead resistance. Price action broke below major three-star support last Wednesday and now this level at .74855-.7504 is going to come in as major three-star resistance. On the positive, price action did hold the next key support level. Still, the tape is vulnerable until a close back above the resistance.
Bias: Neutral
Resistance: .74855-.7505***, .7552-.7565**, .7615-.7649***
Support: .7427-.7436**, .7330***
May Corn commodity futures news and research
Yesterday’s Close: May corn futures finished yesterday’s session 2 ¼ cents lower, trading in a range of 5 ¾ cents.
Fundamentals: Weekly export inspections came in at 765,185 metric tons, this was below the low end of the expected range. The funds have been relentless in their selling, putting them in the ball park of short 220,000 contracts. This is a big short position with recent weather and potential delays around the corner, as we go into planting season. There has also been a lot of talk about the potential logistic issues when the snow melts. We are friendly the market but understand that it could get worse before it gets better, putting our bias at Neutral/Bullish.
Technicals: If you’re looking for a bullish technical silver lining, you’re looking for affirmation. The chart has been breaking down for the last three weeks, making new contract lows in the previous two sessions. The RSI (relative strength index) is in oversold territory but that is not reason enough to aggressively buy. The bulls need to see consecutive closes back above technical resistance to encourage a meaningful round of short covering. That pocket comes in from 363-366.
Bias: Neutral/Bullish
Resistance: 363-366**, 372 ¼**, 377-380***
Support: 360-361***, 350**
May Soybeans commodity futures news and research
Yesterday’s Close: May soybean futures finished yesterday’s session down 5 cents, trading in a range of 9 ½ cents.
Fundamentals: Weekly export inspections came in at 874,363 metric tons, within the range of expectations. On top of that, we saw a sale of 926,000 metric tons to China. You would think that this would provide a boost to the market, but as we mentioned several times during the government shutdown, the market is constantly pricing information, the USDA is not the gate keeper, and this was likely baked into the cake. We will continue to keep an ear to the ground on any developments on trade but are not holding our breath for anything significant in the very near term.
Technicals: Over the past three sessions we talked about 890 being a level of value on the first test. The fact that there isn’t more of a pop off of that support pocket neutralizes its significance in our mind. If we start breaking down and closing below this pocket, we would expect to see the selling accelerate. Our bias continues to be at neutral as uncertainty remains.
Bias: Neutral
Resistance: 900-903***, 909-913 ½**, 922 ¼-924 ¾***
Support: 884 ¾-887 ¾**, 870-873 ½***, 853****
May Wheat commodity futures news and research
Yesterday’s Close: May wheat futures finished yesterday’s session down 10 ¾ cents, trading in a range of 14 ¾ cents.
Fundamentals: Weekly export inspections came in at 592,001 metric tons, within the range of expectations. Global wheat demand seems stable but there has been no rush to buy US wheat, at some point low prices will cure low prices and boost demand. The funds have been relentless in their selling which has snowballed into more selling via forced liquidation. As mentioned in previous reports, we want to be friendly the market but there is no technical reason to buy so our bias remains neutral.
Technicals: The market has been in oversold territory for 11 consecutive sessions, we have stated that this alone is not enough of a reason to buy, but it is reason for us not to initiate a short position. Some people think the market is binary, if you don’t want to sell it, then you must want to buy it. Sometimes the best trade is no trade. We would rather wait to see a bottom formation start and buy at higher prices.
Bias: Neutral
Resistance: 447 ¼-450**, 463 ¾-466 ½***
Support: 425-427**
June E-mini S&P Futures news and research
Yesterday’s close: Settled at 2784, up 37.00
Fundamentals: U.S benchmarks melted higher yesterday, never once looking in the rear-view mirror. The S&P gained as much as 2.7% from its double bottom low Friday which helped fuel the start of the recovery. The unwaveringly ‘patient’ voice of Fed Chair Powell, the bounce back in January Retail Sales and a positive narrative for a few hours on Brexit all contributed to yesterday’s one-sided session. With price action paring the early overnight gains, today could seemingly get off on a different foot at the onset of U.S hours. Brexit is in focus and once again U.K Prime Minister May’s deal is falling apart at the seams ahead of a crucial vote in British Parliament. Despite securing what has been referred to as assurances from the EU as late as yesterday on the Irish backstop, concerns are quickly rising. If today’s vote is rejected, then a vote will follow tomorrow on whether to leave the EU without a deal at all. If that idea is rejected than there could be a third vote to delay the March 29th deadline.
U.S CPI at 7:30 am CT is also front and center this morning. Friday’s strong wage growth was drowned out by such poor job growth. The Fed has the ability to be ‘patient’ because inflation has arguably dissipated over the last six to nine months, however, a strong read today on the heels of strong wage growth will reinvigorate the argument on whether the Fed still has the ability to be ‘patient’. The Core number is watched most closely, expectations are for +0.2% MoM and +2.2% YoY. Going all the way out to December, the Fed is still not expected to hike. A soft number will continue to support that ‘patient’ Fed and help to bid risk-sentiment. In fact, there is a 15.5% probability that they cut by December.
Fed Governor Brainard speaks at 8:45 am CT and there is a 10-year Note auction at noon CT.
Technicals: After yesterday’s session-long run, the S&P extended gains to a high of 2799 last night and right to major three-star resistance at 2796.75-2798. This was a sticky area in the back half of February, and we imagine it will continue to be such. A close above here though will invite buyers to attempt another run at the front month high of 2819.75. To the downside, first key support comes in at 2782.75-2784 and this aligns with yesterday’s settlement; a move below here will neutralize the imminence of this melt-up. Major three-star support comes in at 2771.25 and a move below there will signal a near-term failure. This landscape is fairly similar to the NQ with yesterday’s settlement coming in at 7192.25 and major three-star support below at 7128.50-7146.
Bias: Neutral/Bearish
Resistance: 2796.75-2798***, 2805-2807.75**, 2814-2819***, 2824.25-2825.75**, 2833.25-2840***
Support: 2782.75-2784**, 2771.25***, 2762.75-2764.25**, 2752-2754.25**, 2737.75-2741.50**, 2722-2726.50***
NQ (June)
Resistance: 7231-7241***, 7278.50**, 7368.50***
Pivot: 7211-7218.75
Support: 7192.25**, 7128.50-7146***, 7089.25-7097.50*, 7053-7066.50***, 7024.75**, 6965.75-6984.25***
If you have any questions about the commodity futures and options markets, trading or opening an account please let us know!
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