Live Cattle
The February Live Cattle contract opened (121.85) above the Friday high (121.575) and stalled at resistance at the 21 DMA (121.95) on Monday, December 18. It was only able to touch the 21 DMA, as the high was at 121.95. It broke down hard from the high, trading down to 120.075, just above support at the 13 DMA (120.05). It ended the session at 120.725. A break down below the 13 DMA could take price down to support at 119.15. A rally above the rising 50 DMA (121.175) could lead to a test of resistance at declining 21 DMA. Breaking out above the 21 DMA could lead to a test of resistance at 123.325. The negotiated cash trade was at a standstill on Monday. Monday afternoon boxed beef cutout values were higher on Choice and Select on moderate to good demand and moderate offerings. Choice was up 1.28 to 203.15 and Select was up 1.76 to 185.01 on 110 loads. The choice/ select spread narrowed to a plus 18.14. The estimated cattle slaughter for Monday was reported at 119,000.
Feeder Cattle
The January Feeder Cattle contract opened (148.50) above the Friday high (148.225), but couldn’t generate any upside energy as price stalled at the session high of 148.85. Feeders broke down hard from the high, trading through support at the 200 DMA (147.50), making the session low at 146.65. This is just above the 8 DMA (146.40) and the 146.025 support level. It recovered off the low and overtook the 200 DMA, ending the session above it at 147.80. The rising 200 DMA will be the key to trade on Tuesday, in my opinion. A breakdown below the 200 DMA could lead to a retest of the rising 8 DMA and the 146.025 support level. Taking out support could lead to a test of the Friday low at 145.05. Holding above the 200 DMA could lead to a retest of the Monday high and then resistance at 149.975.
Lean Hogs
The February Lean Hogs contract opened (68.85) above the Friday high (68.625) and rallied to the 69.80 resistance level, reaching the high of the day at 69.925. It failed at resistance and broke down hard. It traded down past the 67.80 support level, making the low at 67.30. It ended the session at 67.60. A break down from the Monday low could see price test support at 66.55 and then the 50 DMA (65.525). If price can’t break down past the low, we can see resistance tested at the rising 21 DMA (68.60). Resistance above remains at 69.80.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 21 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.