Live Cattle
The February Live Cattle tested support at the 100 (117.35) and the 200 (117.20) DMAs, making the low for the day at 117.375 on Tuesday, January 16, 2018. Price once again respected these support levels and by the end of the session was testing the session high (118.40), reaching 118.30 and ending the day at 118.15. It challenged resistance at the 8 DMA (118.25) but couldn’t stay above it. Resistance will be at the 8 DMA on Wednesday and a break out above it could lead to a test of the gap from 119.00 to 119.25. Resistance follows at 119.80 and 121.325. A failure from the 8 DMA could see another test of the long-term moving averages. The negotiated cash trade was at a standstill in all major feeding regions. 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 2.45 to 205.58 and Select was down 2.15 to 199.89 on 148 loads. The choice/ select spread narrowed to a plus 5.69. The estimated cattle slaughter for Tuesday was reported at 118,000.
Feeder Cattle
The March Feeder Cattle contract tested trendline support at 142.45 Tuesday morning, making the low of the day just below it at 142.10. It grinded higher from here, before a late session surge took the March contract back to the session high (144.15). It ended the day nearby at 144.025. It is above the 8 (142.75), 13 (143.275) and 21 (143.425) DMAs. This is a potentially short-term bullish scenario. Trading above the Tuesday high could lead to a test of resistance at 145.05. Trendline resistance then comes in at 145.70. The last touch of this trendline ended up being the high for the up move and price fell back to test support at 140.775, making the low at 140.125. This is an important trendline, in my opinion. A breakout above could lead to short covering and a test of resistance 146.025.A break down from the Tuesday high could see price revisit support at the short-term moving averages.
Lean Hogs
The February Lean Hogs contract made a new high for the up move, reaching 74.25 before pulling back at the end of the session to 73.675. The new high was a test of resistance at 74.225; it held leading to the slight pullback. Taking out the Tuesday high could lead to a test of resistance at 75.70. A pullback from 73.675 could lead to a test of support at 72.85.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, January 19th, 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.