Live Cattle
The February Live Cattle stampeded its way higher on Wednesday, January 17, 2018. It went limit up (121.10) and remained there for most of the session, with furious trading at settlement time taking it below limit and to the limit. I don’t have settlement but it ended the day up limit as after the settlement period it went up limit again and stayed there. The February Live Cattle contract is right at resistance (121.325) and the 50 DMA (121.35). A break out above here could see a test of trendline resistance at 122.45 and then 123.125. A failure from the here could see a test of the 21 (120.00) and 13 (119.775) DMAs. The negotiated cash trade was at a standstill in all major feeding regions. The fedcattlexchange.com auction took place with 304 head for sale. One sale 0f 108 cattle took place at 119.75. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and offerings. Choice was down 0.28 to 205.30 and Select was down 0.28 to 199.61 on 126 loads. The choice/ select spread was steady at 5.69. The estimated cattle slaughter for Wednesday was reported at 117,000.
Feeder Cattle
The March Feeder Cattle contract staged an impressive rally, taking out resistance at 145.70 and 146.025 trading to the high of the day at 147.40. This is right at the 147.35 resistance level. An end of day pullback brought price back down to the trendline, and it ended the day just above it at 146.00. Trading above 146.025 could lead to a retest of resistance at 147.35 and breaking this level could lead to a test of resistance at the declining 50 DMA 148.65 and the 200 DMA 148.725. As you can see the 50 has crossed below the 200 DMA. This is strong resistance. This is also at the last high at 148.55. Strong resistance. A topping out here could be an indication of a double top. Closing above here could be very bullish and lead to a strong rally. If March Feeder Cattle can’t make it to this area it could break down and test support at the rising 13 (143.60) and 21 DMAs (143.40).
Lean Hogs
The February Lean Hogs contract consolidated within the Tuesday range, forming an inside candle. It pulled back to support at 72.85, making the session low at 72.525. It ended the day at 72.725. Getting above 72.85 could lead to a test of the Tuesday high (73.70). Resistance follows at 74.225.Taking out 74.225 could lead to a test of resistance at 75.70. Trading below the session low could lead to a test of the rising 8 (72.35) and 13 (71.95) DMAs. Trendline support is at 71.85.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, January 19th, 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.