Live Cattle
The February Live Cattle contract tested the 123.125 resistance level early in the trading session on Tuesday morning, trading to the session high at 122.625. It broke down from here trading through support at 121.20 and 120.50 on its way to the session low at 119.575. This is just above the 119.15 support level. It formed an outside day candle, showing the volatility during the trading session. It ended the day 1t 120.40, just below the 50 DMA (120.425). Holding above ther 120.425 – 120.50 zone could see a rally to the 121.20 resistance level. A break out above here could see price test the Tuesday high. Resistance then comes in at 123.125 and 124.85. A breakdown from the zone could lead to a test of support at 119.15. Key support then comes in at 117.75. The negotiated cash trade was quiet. Tuesday afternoon boxed beef cutout values were higher on Choice and Select on light to moderate demand and offerings. Choice was up 0.89 to 209.08 and Select was up 1.09 to 186.63 on 110 loads. The choice/ select spread narrowed to a plus 22.45. The estimated cattle slaughter for Tuesday was reported at 120,000.
Feeder Cattle
The January Feeder Cattle contract tested the 100 DMA (150.975) early in the trading session, making the session high at 151.10. It failed and broke down below the 149.975 support level, trendline support (149.325), and the 147.35 support level on its way to testing the 200 DMA (146.35). It made the session low at 146.05. It almost went down limit, missing it by 0.60. It was able to recover and traded above the 200 DMA and the key 147.35 level. It ended the day at 147.725. This will be key for Wednesday’s trade, in my opinion. It formed an outside day candlestick, indicating the volatility in the market. Holding above the 147.35 level could lead to a test of resistance at the rising trendline (149.425). A rally above the trendline could see price revisit the above resistance levels. A breakdown below the rising trendline could lead to a retest of the rising 200 DMA (146.35).
Lean Hogs
The February Lean Hogs contract opened above the 71.325 key level at 71.70, but couldn’t even trade past the Monday high (71.80) as it failed and broke down to support. It traded down to the 200 DMA (70.325), making the low at 70.15. It ended the day just above the 200 DMA at 70.35. Holding above the 200 DMA could lead to a test of resistance at 71.325. A breakout above here could take price to resistance at 72.25. A failure from the 200 DMA could see a test of the 69.90 support level. A break down from here could test support at the rising 13 DMA (68.45).
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.* *
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.