Live Cattle
The December Live Cattle contract failed again at the 119.15 resistance level on Thursday, October 12, 2017. It made a weak attempt at mid-session to test this level, making the day’s high at 119.00. It broke down from here and traded down to support at the 8 DMA (116.875) and 116.55, making the low in between these levels at 116.625. It recovered from here and ended the session at 117.525. Trade is consolidating between these levels as for the past 4 trading sessions price has been unable to break free from this area. We could see continued consolidation on Friday. It would take a break out above 119.15 to lead to a test of resistance at 120.575 and then 121.35. A breakdown below 116.55 could lead to a test of support at the 200 DMA (115.625) and the 114.25. The negotiated cash market saw some trades at 111.00 for live cattle and 175.00 for dressed. Thursday afternoon boxed beef cutout values were higher on Choice and Select on moderate to good demand and light to moderate offerings. Choice was up 1.12 to 197.44 and Select was up 0.69 to 189.45 on 121 loads. The choice/ select spread narrowed to a plus 7.38. The estimated cattle slaughter for Thursday was reported at 118,000.
Feeder Cattle
The November Feeder Cattle continues fail at the 156.025 resistance level. For the fifth day in a row it traded above this level, this time making a high at 156.675 as it was unable to take out the Tuesday high (156.975). The failure to take out the Tuesday high (the high occurred mid-session), led to panic selling and price broke down below the 8 (155.125), 13 (154.425) and 21(154.00) DMAs, making the session low at 153.925. It was able to recover from here and ended the day above the 13 DMA at 154.60. It formed an outside day candle and a break out above or below this candle could lead to the next support/ resistance levels. Taking out the Thursday high could see price test resistance at 157.30 and then 159.975. Breaking down from the session low could see price test support at 153.50 and then 152.30.
Lean Hogs
The December Lean Hogs contract opened (62.75) just above the 50 DMA (62.70) and rallied to the session high (63.125), just below the 63.325 resistance level. It couldn’t hold onto the rally and broke down, making the session low (61.30) late in the day. It recovered a little from the low and ended the session at 61.75, just below the 61.80 support level. Once again the Lean Hog market is in a trading range. The range is bounded by the high (63.45) and the low (60.60). The 61.80 level will be the pivotal number for trading on Friday. If price can recover and get above 61.80, a test of the declining 50 DMA is possible and then a rally from here could lead to a test of resistance at 63.325. A break down from 61.80, could lead to a test of support at the rising 13 DMA (61.00) and then a test of the Monday low (60.60) and then the now rising 21 DMA (60.175). Trendline support is at 60.45 and 59.85.
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.* *
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.