Live Cattle
The December Live Cattle contract held the 119.15 support level on Wednesday morning with the low of the day occurring in the first 5 minutes of trade at 119.025. A choppy morning had price trade between a high at 120.00 to a low at 119.075. Price was able to rally the last two hours of the session and made a new high just above the 120.50 resistance level at 120.775 before moving lower and it ended the day at 120.075. The price action for the day was contained between the Tuesday range creating an inside day candle. The Wednesday high and low should be the key levels for the Thursday trading session, in my opinion. A rally above the high would take price above the 120.50 resistance level and could lead to a test of the 121.325 resistance level. A break out above here could see price move towards the 123.125 resistance level. Trading below the low would take price below the 119.15 support level and could lead to a test of support at 117.725. A breakdown from here could test support at 116.55. The negotiated cash trade was light to moderate on light to moderate demand with live sales at 119.00 in the Southern Plains. Nebraska trade was also light to moderate on light to moderate demand with live sales from 119.00 to 120.50 and dressed sales from 188.00 to 190.00. The Western Corn Belt trade was light on light demand with live sales from 119.00 to 120.00. Trade was slow on light demand in all other feeding regions. The fedcattlexchange.com auction took place on Wednesday with 969 head for sale. There were 258 head sold in Nebraska at 119.25 and 359 sold between 119.00 and 119.25 in the South. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate to heavy offerings. Choice was down 0.54 to 210.13 and Select was down 2.88 to 190.61 on 138 loads. The choice/ select spread widened to a plus 19.52. The estimated cattle slaughter for Wednesday was reported at 118,000. The cattle on feed report will be released after the close on Friday afternoon and expectations are for cattle on feed to be up 8% from last year, placements to be up 8% and marketings up 5.5%.
Feeder Cattle
The January Feeder Cattle contract broke down and tested the 152.30 support level in the first 15 minutes of the session, making the low of the day at 152.75. It rebounded from here, and made its way higher and by the end of the session made its high at 154.40. It touched the rising 50 DMA (154.40) and pulled back slightly and ended the day at 154.175. This is just above the 153.70 support level and right at the 154.25 key level and the 50 DMA. The 154.40 – 153.70 area could be the key to Thursday’s trade. With the Wednesday session forming a hammer candlestick a rally above the high could take price towards the 155.90 – 156.475 resistance zone. Below this area and price could make its way towards the 152.30 support level again. Support then comes in at 149.975.
Lean Hogs
The December Lean Hogs contract sold off from the open (60.275) on Wednesday morning, trading down to the session low at 59.25. This is just below the 59.825 support level. It rebounded from the low and rallied the remainder of the day. It made the high at the end of the session, reaching 61.225 and then ending the day at 61.20. It ended the day in the middle of Tuesday’s range and follow through to the upside could take price to the 61.80 resistance level and then the Tuesday high at 62.40. A break down below 61.20 could see price revisit the 59.825 support level. Taking out the low could send price towards the 58.10 support level.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, November14 at 3:00pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.* *
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
www.walshtrading.com
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.