Live Cattle
The April Live Cattle contract gap opened lower (124.60) on Tuesday, January 30, 2018 and traded down to the low of the day at 122.725, this is just below trendline support at 122.775. It found support here and rallied to a new high (124.90) for the day and closed the gap created at the open and the Monday low. It ended the day at 124.125. It formed a hammer candlestick. Live Cattle is consolidating between a high of 126.30 and a low at 122.025. The Tuesday high at 124.90 will be the key level for trading on Wednesday, in my opinion. Holding above this level could take price back up to retest 126.30 resistance. Breaking out above here could take price to resistance at 127.15. A failure from the here could see a test of the 8 DMA at 124.15 and then support at 123.125. Trendline support is at 122.975. The negotiated cash trade saw live sales at 126 in Kansas, Nebraska and Colorado. Trade was moderate. Trade was slow in all other feeding regions. Tuesday afternoon boxed beef cutout values were higher on Choice and Select on light to moderate demand and moderate offerings. Choice was up .58 to 209.69 and Select was up 0.24 to 204.37 on 109 loads. The choice/ select spread widened to 5.32. The estimated cattle slaughter for Tuesday was reported at 116,000.
Feeder Cattle
The March Feeder Cattle contract opened lower and traded down to support at the 21 DMA (144.875), making the session low at 144.425. Support held and Feeder Cattle surged, trading to the high (147.675) of the day at the end of the session. It ended the session at 147.425. The 147.35 resistance level will be the key level for trading on Wednesday, in my opinion. Breaking above this level could lead to a test of resistance at the declining trendline at 148.15. A break out above here could lead to a retest of the 200 DMA (149.275). A failure to stay above 147.35 could see price revisit support at 146.025. A break down below here could see a retest of support at 145.05 and then the rising 21 DMA.
Lean Hogs
The April Lean Hogs contract broke down and traded below the 21 DMA (72.95), making the low at 72.125, just above support at 71.85. It recovered from here and ended the day at 72.825. This is right at the 72.825 support level. Trading above here on Wednesday could lead to a test of resistance at the 13 DMA (73.625) and the declining 8 DMA (73.975). Resistance then comes in at 74.25 and 75.70. A break out below 72.825 could lead to a test of support at 71.85.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, February 1st 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.