The cattle markets responded in a bullish manner to the Cattle on Feed report on Monday, October 22, 2018. Both markets opened higher and rallied throughout the trading session. January Feeder Cattle traded up to resistance at 152.30, reaching its high at 152.00. It settled at 151.725. Continued strength could push price up towards resistance at 153.50 and then 154.25. December Live Cattle traded past resistance at 117.725 on its way to the high at 118.40. It settled at 118.075. The next level of resistance comes in at 119.15 and then the October 1st high at 119.75. Futures are trading at steep premium to the cash market, which traded between 109.00 and 111.00 on a live basis last week. Cash needs to follow higher or this could limit the upside potential of the December futures contract. There is a good chance for this to occur as cash usually rallies at this time. Cut outs strengthen at this time also and so far they have moved higher, choice cutouts going from 202.71 on Friday, October 12th to 208.81 for Monday morning. With cutouts following the seasonal path, the cash market could do the same. Futures prices could move higher and if futures can rally past the October 1st high, I think they can make a run to resistance at 121.325.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, October 24th at 3:00 pm. 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.