The December Live Cattle contract made a new high for the current up move on Tuesday, October 10, 2017, trading up to 119.10, just below the 119.15 resistance level. Trade was led by the October contract, which nearly went up limit; missing by .375. If the December contract fails to rise above the 119.15 resistance level, some consolidation within the Tuesday range is possible. A break out above the high, could lead to a test of resistance at 120.575 and then 121.35. The negotiated cash market was quiet on Tuesday. There were bids showing at 109.00, but they were passed over. The fedcattleexchange.com auction is on Wednesday with 1,440 head for sale. Will packers be more aggressive at the auction if futures continue to rally? Tuesday afternoon boxed beef cutout values were lower on Choice and higher for Select on light to moderate demand and light offerings. Choice was down 0.73 to 197.40 and Select was up 1.36 to 190.02 on 123 loads. The choice/ select spread narrowed to a plus 7.38. The estimated cattle slaughter for Tuesday was reported at 118,000.
The November Feeder Cattle couldn’t keep pace with Live Cattle as another attempt to break out above the 156.025 resistance failed. It did reach a new high for the up move at 156.975 and it ended the day above it at 156.175, but it formed a spinning top candlestick, which indicates indecision. The 156.025 will be pivotal for trading on Wednesday. If Feeders can sustain trade above it, a test of the e September 20 high (157.30) is possible. A rally from here could lead to a test of the 159.975 resistance level. A failure below the 156.025 level could lead to a test of the Tuesday low (155.15). Breaking down from here could see price test support at 154.25 and then 153.50. Support then comes in at 152.30.
The December Lean Hogs contract opened at the low ((61.225) and rallied to the session high (62.35), all in the first 5 minutes of trading. It spent the remainder of the day drifting lower and ended the session at 61.65, just below the 61.80 resistance level. The 61.80 level will be the pivotal number for trading on Wednesday. If price can recover and get above 61.80, a test of the Tuesday high is possible and then a rally from here could lead to a test of resistance at the 50 DMA (62.825). Resistance then comes in at 63.325. A break down from 61.80, could lead to a test of the Monday low (60.60) and then a test of support at the rising 13 DMA (60.225) and then the flat 21 DMA (59.925) and the trendline at 59.975. Support then comes in at 58.10.
For those interested I hold a weekly livestock webinar on Friday, October 13 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.* *
Senior Market Strategist
Walsh Trading, Inc.
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.