Live Cattle
The February Live Cattle contract once again held the 124.75 support level Tuesday morning as another attempt to break lower failed. The February contract held the Friday and Monday low (124.35) during the morning selloff, trading to the low of the day at 124.65. It rallied from here as it once again overtook the 125.50 resistance level and it ended the day above resistance at 125.775. The session high was made in the beginning of the session at 126.15. This is lower than the Monday high as it formed an inside candle, trading in between the Monday range. A rally above the Tuesday high could take price to the 127.15 – 128.30 resistance zone. Trading below 125.50 could take price to support at 124.85 and the rising 8 DMA also at 124.85. A breakdown below here could lead to a test of support at 123.125. The negotiated cash trade was quiet. Tuesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate to heavy offerings. Choice was down 0.94 to 208.63 and Select was down 0.08 to 187.20 on 169 loads. The choice/ select spread narrowed to a plus 21.43. The estimated cattle slaughter for Tuesday was reported at 120,000.
Feeder Cattle
The January Feeder Cattle contract also traded within its Monday range, forming an inside candle. The Tuesday range was 154.925 to 153.325. The high touched the 50 DMA (154.925) and the low was just below the 153.70 support level. It ended the session just below the 50 DMA at 154.55. A rally above the 50 DMA could lead to a test of the 156.025 – 156.175 resistance zone. Aggressive short covering above this zone could lead to the 158.10 resistance level. A breakdown from the 50 DMA could take price down to the 153.70 – 154.25 support zone. A failure from here could see the rising 8 DMA tested at 152.70. Support then comes in at 152.30.
Lean Hogs
The February Lean Hogs contract tested the 69.90 support level on the open, trading to the low of the day at 69.775 before breaking out above the 200 DMA (70.325) and trading to the high of the day at 72.00. It ended the day just above resistance at the August 16 high (71.325) at 71.425. Trading above the session high could lead to a test of resistance at 72.90. A breakout above here could take price to resistance at 74.125. A failure from 71.325 could see a test of the 200 DMA and then the 69.90 support level.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, November 30 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.