Live Cattle
The April Live Cattle contract gap opened lower (124.55) on Tuesday, February 6, 2018 and recovered, rallying to test resistance at 125.50, making the session high at 125.625. It wasn’t able to hold the high and it broke down and traded down to make the low for the day at 124.30. The rest of the session was choppy trading between 125.30 and 124.35. It ended the day at 124.70, in between the 8 ((124.80) and 13 (124.45) DMAs. It formed an inverted hammer candlestick. A break down below the Tuesday low could lead to a test of support at 123.125. A failure from the here could see a test of the rising 21 DMA at 122.325. A rally off the 8 DMA could see a retest of the Tuesday high. The negotiated cash trade was mostly inactive in all feeding regions. Some sales were made in Iowa at 127.00. Tuesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and offerings. Choice was down 1.00 to 208.43 and Select was down 1.43 to 202.73 on 116 loads. The choice/ select spread widened to 5.70. The estimated cattle slaughter for Tuesday was reported at 116,000.
Feeder Cattle
The March Feeder Cattle contract opened lower (148.175) and traded down to trendline support (147.975), making the session low at 147.975. Support held and Feeder Cattle surged, trading to the high (150.05) of the day. The high was just above resistance at the 200 DMA (149.475) and long term resistance at 149.975. It couldn’t sustain the rally and it range traded the remainder of the session (148.50 – 149.55). It ended the session at 148.725. Trendline support drops to 147.95 on Wednesday and this should be the pivotal level for trading. A break down below the trendline could see support tested at 147.35 and then 146.025. Holding above the trendline could lead to a test of resistance at the rising 200 DMA. Then comes 149.975 and the 100 DMA (150.525) is next.
Lean Hogs
The April Lean Hogs contract opened (72.775) lower, tested the 72.825 key level (high 72.825) and broke down hard. It traded down to the low of the day (70.60), which is just above support at the 200 DMA (70.45). t ended the day at 71.40. This is just above the key level at 71.325 and rising trendline support at 71.25. Trading above here on Wednesday could lead to a test of resistance at 71.85 and then 72.825. A break down below the trendline (71.40) on Wednesday could see price revisit the 200 DMA. Support then comes in at 70.15 and 69.30.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, February 8th 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.