The February Live Cattle made a weak attempt to rally above the 123.125 resistance level on Thursday, January 4, 2018 trading to a nominal new high for the up move at 123.625. Once again it couldn’t stay above the 123.125 key level. After making several attempts to launch to the next resistance level, buyers gave up and price boke down to the mid-session low at 122.50. It consolidated above here and then late day selling took price down to the low of the day at 122.10. It ended the day at the low. It formed an outside day down candle. It ended up just above support at the rising 50 DMA (122.05). Trading above the 50 DMA could see price test resistance at 123.125. Resistance then comes in at 124.675. A break down below the 50 DMA could see price test support at 121.325. Support then comes in at 120.60 and 120.30 (rising trendline). Expectations for this week in the cash market are for steady to higher prices. The negotiated cash trade was at a standstill on Thursday. Thursday afternoon boxed beef cutout values were higher on Choice and Select on moderate demand and moderate offerings. Choice was up 0.05 to 208.67 and Select was up 1.70 to 200.86 on 142 loads. The choice/ select spread narrowed to a plus 7.81. The estimated cattle slaughter for Thursday was reported at 113,000.
The March Feeder Cattle contract broke out above the Wednesday high (147.125) and tested the rising 200 DMA (148.325), making a new high for the up move at 148.55. Sellers came in and took price down towards the 146.20 support level, making the late-session low at 146.475. It consolidated till the final 20 minutes before a wave of selling pressured price till the end of the day, making a new low at 145.025. This is just below the 145.05 support level. It ended the day at 145.10. It formed an outside day down candle. A break down below the 145.05 support level could see price test support at the declining 13 DMA (143.75). Trendline support is nearby at 143.40. The 8 DMA adds to support at 143.225. If the 145.05 support level contains the selling, a test of the 146.20 and 147.35 resistance levels is possible. The rising 200 DMA looms above.
The February Lean Hogs contract continued to consolidate on Thursday, as it traded within the 72.45 to 69.90 trading band. The February contract traded from a low of 70.825 to a high of 71.80 and ended up near the high at 71.50. It formed a Doji candle and it is above the 71.325 key level. A breakout above the 71.80 high could send price back to the upper end of the range with resistance at 72.45. A breakdown from 71.325 could lead to a retest of support at the 200 DMA (70.40).
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Ben DiCostanzo Senior Market Strategist Walsh Trading, Inc. Direct: 312.957.4163 888.391.7894 Fax: 312.256.0109 [email protected]