Live Cattle
The April Live Cattle is now the lead contract as the volume is higher than the February contract. The April contract grinded higher on Thursday, January 18, 2018. It made a new high for the up move, reaching 123.60. It ended the session at 123.55, just above resistance at 123.125. The session high is just below the January 4th high at 123.625. A break out above here could see a test of resistance at 124.70 and trendline resistance at 124.85. This could be a strong area of resistance. A failure from the here could see a test of trendline support at 122.225. The negotiated cash trade was at a standstill in all major feeding regions. Thursday afternoon boxed beef cutout values were higher on Choice and Select on light to moderate demand and moderate to heavy offerings. Choice was up 0.39 to 205.69 and Select was up 1.26 to 200.87 on 152 loads. The choice/ select spread narrowed to 4.82. The estimated cattle slaughter for Thursday was reported at 118,000.
Feeder Cattle
The March Feeder Cattle contract consolidated Wednesdays gains, trading within the upper portion of its range for most of the session. A late day rally took price to a nominal new high (147.50) for the up move. It ended the session at 147.30. It is at the 147.35 resistance level and this will be the pivot for Friday’s trade, in my opinion. Breaking above this level could lead to a test of resistance at the declining 50 DMA 148.375 and then the 200 DMA (148.80). As you can see the 50 has crossed below the 200 DMA. This is strong resistance. This is below 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 fails; it could break down and test support at 146.025 and then the declining trendline at 145.125.
Lean Hogs
The April Lean Hogs contract is now the lead contract as its volume is greater than the February contract. It traded between 76.225 and 75.275 and ended the day near the high at 76.20. This just above the 75.70 resistance level and just below the 200 Week MA (76.375). Trading above these levels on Friday could lead to test of resistance at 77.90 and then 78.625. A break down below 75.70 could lead to a test of support at 74.25.
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.