The December Live Cattle contract had a strong rally from the open on Wednesday, September 27, 2017. It traded above the 100 DMA (114.85) and approached the 200 DMA (115.55) reaching a high at 115.325. It ended the session just above the 100 DMA at 114.925. Trading above the 200 DMA could lead to a test of the September 22 high at 117.725. A failure from the 100 DMA could see price revisit the Wednesday low (113.525). The negotiated cash market saw trades early in the morning at 105.00 and 105.50 in Iowa. The rally in the futures market had producers rejecting packer bids from 106.25 to 107.50 on the fedcattleexchange.com auction. There weren’t any sales at the auction because of the rejections and I didn’t see any trades in the negotiated cash market afterwards. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 1.48 to 195.30 and Select down 3.20 to 189.91 on 150 loads. The choice/ select spread widened to a plus 5.39. The estimated cattle slaughter for Wednesday was reported at 118,000.
The November Feeder Cattle gap rallied from the open, taking out the Tuesday high and trading above the 8 DMA (154.05) reaching a high of 154.975. It ended the day (154.425) above the 8 DMA. It is now above the moving averages (8, 13, 21, 50, 100, 200) I follow, setting up a possible attempt to rally to resistance up at 156.025. A failure form the Tuesday high could see price revisit the Wednesday low (152.50).
The December Lean Hogs contract broke out above the Tuesday high and approached trendline resistance up at 60.025, reaching a high at 59.75. It ended the session just below the high at 59.65. It ended the day above the 8 (58.525) and 13 (59.15) DMAs, setting up a battle with the trendline the 21 DMA (60.225) for the Thursday trading session. A breakout above the 21 DMA could see price move towards resistance at 61.80. A failure from the Wednesday high could see a pullback towards the short-term moving averages and then the 58.10 support level.
For those interested I hold a weekly livestock webinar on Friday, September 29 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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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.