Live Cattle
The February Live Cattle contract traded inside the Tuesday range (120.45 – 117.675) on Wednesday, December 13. The Wednesday range was 120.00 high to 118.125 low. It ended the day at 118.40, below the key 119.15 level. A break down below the Wednesday low could take price down to trendline support at 117.225. Support then comes in at the 200 DMA (116.75). A rally off the low will have resistance at 119.15, then the 120.00 high. A rally above the high could lead to a test of resistance at 121.325. The negotiated cash trade was quiet. The fedcattleexchange.com auction took place on Wednesday morning with 704 head for sale. There was one lot sold at 116.00 with 75 cattle transacted. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 1.58 to 202.48 and Select was down 0.90 to 185.08 on 135 loads. The choice/ select spread narrowed to a plus 17.46. The estimated cattle slaughter for Wednesday was reported at 119,000.
Feeder Cattle
The January Feeder Cattle contract opened (147.325) above the rising 200 DMA (147.125), ran past resistance at 147.35 and traded up to the high of the day at 148.375, during the first 10 minutes of the trading session. It failed and broke down below the 8 DMA (146.65) and traded down to the low for the day at 145.35. This is just above the downward sloping trendline support (145.275)) level and the key support level for Thursday’s trade, in my opinion. It will decline to 145.175 for Thursday’s trading session. Holding above the trendline could lead to a test of resistance at the 8 DMA and then the 200 DMA. A breakdown below the trendline could lead to a test of the December 11 low (144.45). Taking out the low could take price down to support at 143.50 and then 142.05.
Lean Hogs
The February Lean Hogs contract opened (66.50) just above the Tuesday low (66.475) and dipped to the early morning low (66.35), testing support at 66.55. It was able to recover from here and traded up to the high of the day at 67.50. This is just under the 21 DMA at 67.525. Resistance held and price broke down to the low for the day at 66.325. It bounced yet again and traded up to 66.975 before ending session at 66.875. A rally off of the last price could see a retest of the 21 DMA. A breakout above here could take price to resistance at the declining 8 DMA (68.65). A failure from the low could lead to a test of support at the 50 DMA (65.30). A break down from here could test support at the 64.80 support level and then the 100 DMA (64.325).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, December 14 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.