Blue Line Futures: Livestock Roundup & 2 Minute Drill (Grains)
Oct 19, 2017
Below is this afternoons "2 Minute Drill", a quick video from the floor of the exchange (Grains)
The cattle market (live and feeder futures) traded both sides of unchanged through the session as market participants look towards Friday afternoons cattle on feed report. We had listed early estimates in yesterday’s report but have since compiled an average of the trade estimates based on a broader spectrum. The following are the estimates and the range of the estimates: On Feed: 104.6% ranging from 103.4-106.2%, Placements at 108% ranging from 103.4-116%, Marketing’s at 102.6% ranging from 101.2-103.1%. The report has a bearish hint to it but some of that could be priced in to an extent. We know funds have a large net long position in cattle, and in feeders a record net long position, long liquidation could accelerate selling on a bearish report.
Cutout Values Choice Select
Current Cutout Values: 199.57 190.76
Change from prior day: 2.31 1.67
Choice/Select spread: 8.81
Cattle Technicals (if you want to see the charts we are looking at please contact me)
Live Cattle (December)
December live cattle traded on both sides today as inch closer to the cattle on feed report tomorrow afternoon, a report that typically leads to an interesting Monday trade. The market had started off on a stronger note on the back of a strong close yesterday, but it was not enough to invite additional buying interest. The chart is technically bullish as we have continued to make higher highs and higher lows over the last two months. A close below 114.5 would turn the tide and likely lead to long liquidation. ON the flip side, first technical resistance remains at 117.575, a break above this will likely lead to an extension of the 2-month rally with the next objective being 119.825; above that is contract highs at 122.85.
Resistance: 117.575**, 119.175-119.85***, 122.85****
Support: 114.35-114.60***, 112.65-112.945***, 111.30-111.50**
Feeder Cattle (November)
November feeder cattle managed to close moderately higher after buyers stepped in at the bottom end of the trading range. 151.375-151.60 has been the support level in play over the last month, this was also the original breakout point on September 18th which led to a nearly $7 rally over the course of three sessions. With funds holding a large net long position, a technical breakdown could put some serious pressure on the market. 149.20 is the first line in the sand technicians are watching, but 147.30-147.88 would be the ultimate objective over the short term. On the resistance side of things, the top end of the range comes in from 155.375-156.175 on a closing basis, a breakout above takes us to new contract highs.
Resistance: 155.375-156.175****, 158.025**, 160.90**, 165.225****
Support: 151.375-151.60***, 149.20**, 147.30-147.88****
Lean Hog Commentary and Technicals (December)
December lean hog futures managed to get some follow through on the back of yesterday’s strong price action off of technical support in the previous session. Cash developments have been favorable over the last three weeks but can they continue to firm? That is going to be a big focus going forward. We do have a cold storage report out on Monday, that is expected to show 593 million pounds of pork, this compares with the five-year average of 609 million pounds. On the technical side of things, our technical support pocket comes in from 61.38-61.82a breakdown below could lead us back to prices that have a 5 in front of it. On the top side, technical resistance comes in from 65.20-65.675 which is the August highs as well as the contract highs from the month prior in July.
Resistance: 65.20-65.675***, 67.825**, 71.325**
Support: 61.38-61.82***, 60.14**, 55.775-56.20****
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.