Live Cattle
The December Live Cattle contract broke down on Tuesday, October 17, 2017 as analysts’ estimates for the upcoming Cattle on Feed report were revealed. Analysts are predicting another bearish report on Friday afternoon. Price tested the 8 DMA (117.425), reaching a high of 117.475 early on in the session, before breaking down mid-session and trading to the session low (115.825)at the end of the day. It ended the day at 116.225, just below support at the 116.55 level. Support is at the 200 DMA (115.625). A break down below here could lead to a test of support at 114.25. A rally above 116.55 could lead to a test of the 8 DMA and then the 119.15 resistance level. The negotiated cash market was quiet. Tuesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and offerings. Choice was down 1.15 to 197.66 and Select was down 0.72 to 189.85 on 119 loads. The choice/ select spread narrowed to a plus 7.81. The estimated cattle slaughter for Tuesday was reported at 117,000.
Feeder Cattle
The January Feeder Cattle contract looks like it is taking over as the lead contract as its volume exceeded the November contract for the first time on Tuesday. Price broke down and traded down to a low of 150.325. It ended the day nearby at 150.50. The high was 152.90. Support is at 149.975 and a break down from here could see price test the 100 DMA (149.20), the 50 DMA (148.725) and then support at the 147.35 level. A turnaround from the low could see price revisit the152.30 resistance level.
Lean Hogs
The December Lean Hogs contract opened (64.00) higher and rallied towards the 64.80 resistance level, reaching a high at 64.50. It failed from here and broke down to test the 61.80 support level, making the low just above at 61.975. It is back in between the 50 (62.45) and 8 (62.05) DMAs; as it ended the day at 62.225. It formed a bearish engulfing candle and follow through to the downside could lead to a test of support at the rising 21 DMA (60.575) and the trendline at 59.80. A recovery from the low could see price test resistance at 63.325.
For those interested I hold a weekly livestock webinar on Friday, October 20 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.