The February Live Cattle contract traded down to a new low (120.825) for the move on Monday morning, before a sharp recovery led to the high of the day at 122.15. It grinded lower from here the rest of the day and ended the session at 121.175. This is just below the 121.20 support level. It formed a spinning top candle, indicating indecision in this area. A rally above the Monday high could take price to the 123.125 resistance level. Resistance then comes in at 124.85. A breakdown from the low could lead to a test of support at 120.50. Key support then comes in at 119.15. The negotiated cash trade was quiet. Monday afternoon boxed beef cutout values were higher to sharply higher on Choice and Select on moderate to good demand and light offerings. Choice was up 2.20 to 208.19 and Select was up 1.93 to 185.54 on 101 loads. The choice/ select spread widened to a plus 22.65. The estimated cattle slaughter for Monday was reported at 119,000.
The January Feeder Cattle contract tested trendline support at 149.125, making the session low just below it at 148.825. it was able to recover and it ended the day at 150.125, just above the key 149.975 level. It formed a doji candlestick, indicating indecision. The session high was 150.875. The 100 DMA is at 151.05. A breakout above these levels could lead to a test of resistance at 152.30. Resistance then comes in at 153.70. A breakdown below the rising trendline (1492325 for Tuesday) could lead to a test of the October 23rd low at 148.175. A breakdown below this level could send price to support at 147.35 and then the rising 200 DMA (146.35).
The February Lean Hogs contract tested the 69.90 support level early in the trading session, trading to the low of the day at 69.70 before breaking out above the 200 DMA (70.325) and trading to the high of the day at 71.80. It ended the day just above resistance at the August 16 high (71.325) at 71.70. 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, December 7 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.* *
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.