Livestock Levels

Ben DiCostanzoGeneral Commentary, Livestock

Live Cattle

The February Live Cattle contract opened at 120.45 on Wednesday, December 20, and made a meek attempt at a rally, trading to the high of the day at 120.80. This is right at the key 120.775 level.  It broke down hard from the high, trading down past the 119.15 support level to test long-term trendline support at 118.10, making the session low just above it at 118.15. It rallied from here and ended the session at 119.025. The 119.15 key level will be the pivot for trading on Thursday, in my opinion. A rally above here could lead to a test of resistance at 120.775 and then 121.325. A break down from here could see a retest of the rising trendline now at 118.25. A break down through the trendline could see price test support at the 200 DMA (116.85). The negotiated cash trade was light to moderate on light to moderate demand in Kansas with live sales at 120.00. In Nebraska, trade was light to moderate on light to moderate demand with a few live sales at 120.00. The fedcattlexchange.com auction took place Wednesday morning with only 466 head for sale. Sales at 120.00 took place with 239 head sold. Wednesday afternoon boxed beef cutout values were sharply lower on Choice and higher on Select on light to moderate demand and moderate to heavy offerings. Choice was down 3.67 to 198.09 and Select was up 1.17 to 185.49 on 163 loads. The choice/ select spread narrowed to a plus 12.60. The estimated cattle slaughter for Wednesday was reported at 116,000.

 

Feeder Cattle

The January Feeder Cattle contract opened (145.20) at the high of the day and broke down hard, almost going down limit as long liquidation pushed prices through support and panic selling ensued.  It traded all the way down to a new low for the down move at 140.975. This is just above support at 140.775. A breakdown below the 140.775 support level could lead to a test of support at 138.95. Holding above support could lead to a test of resistance at 143.20 and then trendline resistance at 144.60.

Lean Hogs

The February Lean Hogs contract rallied on Wednesday as traders lighten up short positions in front of the Cold Storage and Quarterly Hogs and Pigs Report to be released during trading hours on Friday.  The rally took price up to a high of 68.675, just shy of resistance at the 21 DMA (68.90). It ended the day at 68.60. A failure at the 21 DMA could see price test support at 67.90 and then 66.55. If Hogs trade past the 21 DMA a test of resistance at 69.80 is possible.

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.

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**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

bdicostanzo@walshtrading.com

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.