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Blue Line Express: Livestock roundup

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Cattle Commentary

The cattle market opened sharply lower this morning on the back of a bearish cattle on feed report Friday, but firmed up on a steady to firm cash market. Below is a table of the estimates vs the actual. As you can see, placements were the big outlier, this was the biggest September read in 5 years. We had additional news after the bell today in the way of updated cold storage figures. Beef came in at 487.812 million pounds, this compares with the estimates of 502 million pounds and the five-year average of 453 million pounds. Fridays commitment of traders report showed non-commercial and nonreportable traders were net long 96,828 contracts, just up 511 from the previous report.

Cattle on Feed Report

Estimated Range Average Estimate Actual

CoF: 103.4-106.2% 104.6% 105%

Placements: 103.4-116% 107.3% 113%

Marketed: 101.2-103.1% 102.7% 103%

PM Boxed Beef Choice Select
Current Cutout Values: 199.25 191.05
Change from prior day: -.61 -.09
Choice/Select spread: 8.20

Cattle Technicals

Live Cattle (December)

December live cattle futures gapped lower this morning, which also marked the days low. Big technical support came in from 114.525-115. This pocket represents last weeks spike low, trendline support from the august lows, and the 100-day moving average. The inability to break down below this significant pocket invited buyers back into the market. This will continue to be a very significant pocket going forward. On the resistance side of things, 117.375-117.575 will be the pocket the bears want to defend. If the bears can indeed keep a lid on the market, we could see long liquidation ensue. Tomorrows price action will be extremely important in setting the tone going forward. A breakout and close above resistance opens the door for a run towards 120.

Resistance: 117.375-117.575***, 119.175-119.85**, 122.85****

Support: 114.425-115***, 112.65-112.945***, 111.30-111.50**

Feeder Cattle (November)

Feeder cattle futures opened the session lower but spent little time at those lows. As with the live cattle, the inability to trigger additional long liquidation invited buyers back into the market. Key technical support held at 149.70, this represents the 50-day moving average and has acted as a key technical level over the past several months. If the bears can achieve a close below this level, the next line in the sand comes in at 147.94 On the resistance side of things, 153.125-153.675 is the pocket the bulls want to chew through and close above, if they are able to achieve this we could see a retest to the top of the range just above 156.

Resistance: 153.125-153.675***, 155.375-156.175****, 158.025**, 160.90**, 165.225****

Support: 151.375-151.60**, 149.70-150***, 147.30-147.94****

Lean Hog Commentary and Technicals (December)

December lean hog futures stopped short at our technical resistance pocket which came in from 65.20-65.675, this represents the August highs, and the contract highs that we saw in July. This will continue to be a significant barrier for the market, if the bulls are not able to see a close above we could see long liquidation. Fridays commitment of traders report showed non-commercial traders were net long 59,874 contracts, this was up 1,198 from the previous week. If the market is not able to retain momentum, we would expect prices to recede back towards 61.41-61.85. Cold storage was released after the close, that came in at 616.312 million pounds, this was above the estimates of 593 million pounds and above the five-year average of 609 million pounds.

Resistance: 65.20-65.675***, 67.825**, 71.325**

Support: 61.41-61.85***, 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.

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About the author

Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line Futures mission is to put the customer first, and that means bringing YOU the best customer service, consistent and reliable research and state of the art technology.  Oliver has been a guest on CNBC and Bloomberg, among others.  Oliver has over a decade of trading experience. Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.



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