Cattle Commentary: Cattle started todays session with some follow through from turnaround Tuesday, but the buying dried up and sellers stepped back into the market. February live cattle finished the session down .75 at 118.40, this after trading in a range of 1.875 on the day. January feeder cattle were in the same boat as they opened firm but faded in the afternoon, finishing the session down 1.425 at 145.675 after trading in a range of 3.025 on the day. There were early morning bids at 114 that worked up to 115 but the trade was dead. The Fed Cattle Exchange had 704 head offered, only 75 sold at 116 with other bids being passed on at 116. Dressed bids were 184. We would not be surprised to see cash stabilize in the back half of the week which should over some support to the futures market. Boxed beef was lower on the day.
PM Boxed Beef Choice Select
Current Cutout Values: 202.48 185.02
Change from prior day: -1.58 -.90
Choice/Select spread: 17.46
Live Cattle (February)
February live cattle posted an inside day which means they traded within the previous day’s range providing a healthy consolidation for prices. The market made an attempt at the open to get back above 120 and run towards the 120.70 level but failed to attract new buyers. 120.70 represents the middle of the range from the August lows to the November highs. The reversal sparked some additional long liquidation and sent prices back towards the 118.05 level which represents the 1.8% Fibonacci retracement form the August lows to the November highs. If the market cannot get out above technical resistance on a closing basis this week, we could see the market break down further and run towards the 200-day moving average which comes in at 116.55.
Resistance: 119.30**, 120.70***, 123.35-123.80****
Support: 117.575**, 116.24-116.50****, 114.375**, 109.475****
Feeder Cattle (January)
January feeder cattle made another run at the 100-day moving average and 50% retracement from the August lows to November highs on the open; that pocket came in from 148.85-149.075. The inability to get out above this pocket stalled the buying and invited longs to liquidate at better prices. The market did manage to hold yesterdays lows by a hair but that that is a reach for a bull case silver lining. The market has been consolidating for the most part over the past five sessions, bring the RSI back above oversold levels. With that said, the RSI is still at the low end of the historic range for this contract. First technical support comes in from 144.15-144.55, a break and close below opens the door to another leg lower and a test of the 200-day moving average at 142.50.
Resistance: 148.85-149.075***, 152.10-152.475**, 155.55-155.95***
Support: 144.15-144.55****, 142.15-142.50***, 136.10**
Lean Hog Commentary and Technicals (February)
Lean hogs managed to finish the day in positive territory as the bottom end of the range from November and the 200-day moving average held as key support. Unfortunately, the bulls were not able keep prices elevated into the close and the market retreated back to settle in between our key support pocket from 66.40-66-925, this represents the 100 and 200 day moving average as well as the 50% retracement from the August lows to the November highs (coincidently cattle are looking at the same respective retracements). February hogs finished the session up .35 at 66.875, this after trading in a range of 1.175 on the day. It would not be surprising to see the market consolidate to round out the week, but the bears remain in control on the fundamental and technical front. A break and close below support opens the door to accelerated selling towards 65.40.
Resistance: 68.38-68.90***, 70.28**, 72.25-72.45**
Support: 66.40-66.925****, 65.40**, 64.75**
Sign up for 1 or all 5 of our daily Blue Line Express commodity reports!
(Click the button to sign up for a FREE trial of our daily commodity commentary)
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.