Livestock Report by Ben DiCostanzo
Jan 08, 2018
The February Live Cattle gap opened lower (119.00) on Monday, January 8, 2018. This is below the 119.15 support level and price continued lower, trading down to support at the 200 (117.075) and 100 (116.825) DMAs, making the session low at 116.775. It recovered somewhat from the moving averages and ended the day at 117.55. A recovery from here could lead to a test of resistance at 119.15. Support remains at the moving averages. The negotiated cash trade was active for a Monday with confirmed (by the USDA) trading taking place in the South (Texas and Kansas), Nebraska and Colorado at 120.00. Volume estimated at 7,700. Monday afternoon boxed beef cutout values were higher on Choice and Select on moderate to good demand and moderate offerings. Choice was up 0.69 to 210.20 and Select was up 1.05 to 203.37 on 103 loads. The choice/ select spread narrowed to a plus 6.83. The estimated cattle slaughter for Monday was reported at 118,000.
The March Feeder Cattle contract tested support at 140.775, making the low of the day just below it at 140.55. It was able to recover and ended the session at 141.975. It formed a hammer candlestick. A rally above the high (142.375) could lead to a test of trendline resistance at 143.175. Resistance then comes in at the declining 21 DMA (144.20). A break down from the 142.375 high could see price revisit support at 140.775. Support then comes in at 138.95.
The February Lean Hogs contract broke out above the 72.45 to 69.90 trading band. It traded to a high at 73.40, which is right at pitchfork median line resistance. It fell back and ended the session at 72.95. The median line rises to 73.65 0n Tuesday and a breakout above here could lead to a test of resistance at 74.225 and then 75.70. A pullback from 72.85 could lead to a test of support at the rising 8 DMA now at 71.475.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, January 11th, 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.
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Senior Market Strategist
Walsh Trading, Inc.
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.