Turnaround Tuesday in Cattle
Dec 12, 2017
Cattle Commentary: Turn around Tuesday lived up to its name today with live cattle futures finishing the session in positive territory for the first time in nine sessions. February live cattle finished up 1.375 at 119.10, they traded in a 2.775 range on the day. January feeder cattle finished up 1.525 at 146.975, this after trading in a range of 2.725 on the session. Cash trade has been non-existent this week so far but could start picking up towards the back half of the week. Last week’s cash trade was mostly 117-118 with dressed at 187-188. Tomorrows Fed Cattle Exchange has 704 head offered, that will be tomorrow morning. Seasonally, we start to see the market firm as we head into the end of the year. Buying on December 13th and selling on December 28th has been profitable 14 of the last 15 years with the average gain being 2.40.
PM Boxed Beef Choice Select
Current Cutout Values: 204.06 185.92
Change from prior day: -1.47 .26
Choice/Select spread: 18.14
Live Cattle (February)
February live cattle regained strength above the 61.8% Fibonacci retracement level which came in at 118.05. Todays acceleration rocketed prices towards the 50% retracement at 120.70, this was our intermediate term target in yesterdays report, and we were not expecting to see the move in one session. The market failed to hold that strength and retracted to close back below the 100-day moving average at 119.30. If the bulls fail to get back out above here, we could see the selling pressure come back into the market in the back half of the week. Today’s higher close resurrected the RSI to a more normal reading at 37.
Resistance: 119.30**, 120.70***, 123.35-123.80****
Support: 116.24-116.50****, 114.375**, 109.475****
Feeder Cattle (January)
January feeder cattle managed to regain some footing as the sellers stepped aside to allow turnaround Tuesday to live up to the hype. 146 is the first level that the bulls wanted to reclaim, the next and more significant level comes in from 148.85-149.075. This pocket represents the 100-day moving average along with the 50% retracement (middle of the range) from the August lows to the November highs. A failure to see consecutive closes above this resistance pocket will keep the bears in control and likely lead to additional long liquidation and new lower lows. A close back below the 146 level opens the door to the 200-day moving average which doesn’t come in until 142.35.
Resistance: 148.85-149.075***, 152.10-152.475**, 155.55-155.95***
Support: 144.15-144.55****, 141.65-142.25***, 136.10**
Lean Hog Commentary and Technicals (February)
February lean hog futures were not as fortunate as cattle in terms of finding a relief rally. The market traded down to the 200-day moving average which we had laid out as key technical support in yesterdays report. If the market can continue to hold that at 66.425 tomorrow, perhaps we could see some relief in the near term. The 100-day moving average and 50% retracement from the August lows to the November highs comes in near 67. If the market can achieve consecutive closes above this level, we could see the market consolidate higher. A failure to breakout and close above keeps the bears in control for the back half of the week.
Resistance: 68.38-68.90***, 70.28**, 72.25-72.45**
Support: 66.40-66.92****, 65.40**, 64.75**
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