Live Cattle
The December Live Cattle contract broke down on the open (115.75) in front of the fedcattleexchange.com auction on Wednesday, October 18, 2017, trading to the low of the day at 114.525. It recovered from here and traded to the high of the day at 117.075. The auction had only 919 head for sale and had two accepted sales at 109.00 with 230 head sold. After the auction there were reports of a couple of packers bidding 110.00 in Kansas creating a buying frenzy which led to price trading to the high of the day. It is back above the key 116.55 price level and is just below the flattening 8 DMA (117.40). The 8 DMA and the 116.55 levels could be the key levels for Thursday. A break down below here could lead to a test of support at the 200 DMA (115.625) and then the Wednesday low. A rally above the 8 DMA could lead to a test October 11 low (118.10) and then the 119.15 resistance level. The negotiated cash market saw light to moderate transactions at 110.00 on moderate demand. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and offerings. Choice was down 0.40 to 197.26 and Select was down 0.76 to 189.09 on 138 loads. The choice/ select spread narrowed to a plus 7.81. The estimated cattle slaughter for Wednesday was reported at 118,000.
Feeder Cattle
The January Feeder Cattle contract broke down below the 149.975 support level and tested the 100 (149.225) and 50 (148.80) DMAs early in the trading session. It traded down to a low of 148675, before recovering and trading to the high (150.575) of the day. It ended the day nearby at 150.275. It formed a hammer candlestick with the last price above the key 149.975 level. A break down from here could see price test the 100 DMA and the 50 DMA again and then support at the 147.35 level. A break out above the high could lead to a test of the152.30 resistance level.
Lean Hogs
The December Lean Hogs contract opened (62.30) at the session low and rallied above the 50 DMA (62.375), on its way to retesting resistance at 63.325. It reached the session high (63.80) at the end of the day and the last trade was nearby at 63.775. It nearly took out the bearish engulfing candle that was formed on Tuesday, creating an inside candle in the process. A breakout above the Wednesday high could see price retest resistance at 64.80. Breaking down from 63.325 could see the 50 DMA tested.
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.