Live Cattle
The February Live Cattle contract opened (118.575) just below the rising trendline support (118.725) on Tuesday, December 26. The trendline held for the fourth day in a row and price rallied strongly above it, trading up limit by the end of the session. It made the high at 121.575, trading past the 119.15, 120.775 and the 121.325 resistance levels, and ended the day at 121.525. It formed a bullish engulfing pattern and a break out above the Tuesday high could see price move towards resistance at 123.125. A break down from the Tuesday high could see price test support at 120.775 and then a retracement to the middle of the Tuesday range (120.075). The negotiated cash trade was quiet on Tuesday. Tuesday afternoon boxed beef cutout values were sharply higher on Choice and Select on moderate to good demand and light to moderate offerings. Choice was up 3.04 to 202.60 and Select was up 2.95 to 190.83 on 86 loads. The choice/ select spread widened to a plus 11.77. The estimated cattle slaughter for Tuesday was reported at 96,000.
Feeder Cattle
The March Feeder Cattle contract opened (138.625) at the lows (138.60) and rallied all day as traders bought futures at support (138.95) and took price above resistance at 140.775. It traded up to the high at 141.925 and ended the day at 141.30. It formed a bullish engulfing pattern and trading above the Tuesday high on Wednesday could lead to a test of resistance at the declining 8 DMA (143.650. A failure from the high could see price retrace to the middle of the Tuesday range at 140.26.
Lean Hogs
The February Lean Hogs contract rallied on Tuesday as traders took price past resistance at the 200 DMA (70.35) to the high of the day at 71.675. This is just above resistance at 71.325. The session ended at 71.525. If Lean Hogs holds above 71.325 on Wednesday, price can test resistance at 72.825. A failure from 71.325 could see price revisit the 200 DMA.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, January 4th, 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.