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Funds rolled and sold live cattle

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Livestock Commentary: Funds rolled and sold yet again with December live cattle futures closing lower for the fourth consecutive session, posting a low of 122 on the session which is just a stones throw away from the gap at 121.625 that is on everyones radar. February closed moderately lower and April finished the day up .275. Cash cattle today was limited on what has been referred to as light demand. The past two weeks there seemed to be an anxious feeling going into the Friday session due to concerns of a late Friday cash trade, that vibe has somewhat dissipated. PM Boxed beef was slightly lower for the first time in what seems like a long time (see below).

PM Boxed Beef Choice Select
Current Cutout Values: 212.74 198.30
Change from prior day: -.39 -.59
Choice/Select spread: 14.44

Cattle Technicals

Live Cattle (December)

As mentioned above, the December live cattle contract put in a low of 122 today, just a stones through away from the 121.625 gap from October 27th. The feeling we get from talking to people around here is that both the bulls and the bears would just rather that had been filled while we were down there today. If it was earlier in the week we would not be surprised to see that gap fill with some follow through pressure, but the uneasy feeling of going easy into the weekend short may help offer some sort of support to the market. First technical resistance comes in at 122.90-122.925 which is a key Fibonacci retracement from the August lows to the November highs, this also represents yesterdays close and todays highs. As mentioned yesterday, the recent volatility has attracted the attention of many new market participants which could lead to a choppy trade. This is what we mean when we say volatility often times invites more volatility into the market.

Resistance: 122.90-122.925**, 123.825-123.90**, 125.90-126*, 127.65-128.60***

Support: 121.625***, 119.175-119.85**, 117.375-117.725**

Feeder Cattle (January)

January feeder cattle saw pressure to start the day, opening up within our support pocket from 156.65-157.12, but managed to attract buyers towards the end of the day, closing positive on the session. Our first technical resistance pocket comes in from 158.80-159.27. The RSI has become more neutral through the week with a reading of 56. The bulls do remain in control but if the bears can defend first resistance on a closing basis as we round out the week that could start to turn the tide. Funds will be a key driver as they hold a near record net short position. As mentioned yesterday, the recent volatility has attracted the attention of many new market participants which could lead to a choppy trade. This is what we mean when we say volatility often times invites more volatility into the market.

Resistance: 158.80-159.27***, 160.725- 160.90**, 165.225****

Support: 156.65-157.10**,155.10-155.55**, 153.475**

Lean Hog Commentary and Technicals (December)

December lean hog futures marked their seventh consecutive close lower today. There have been zero positive closes in the month of November, to someone off of the street who didnt take a statistics class this means we have to trade higher soon. Sure, we could trade higher, but it could also get worse before it gets better and this strategy over the long term will only end a loss of hard earned capital. Lower cash, higher weights, and pressure from cattle have all been catalysts for the long liquidation. Our support pocket comes in from 61.50-62 which represents the 50, 100, and 200 day moving average. First technical resistance comes in from 64.20-64.32.

Resistance: 64.20-64.32**, 65.20-65.675***, 68.175**

Support: 61.50-62***, 59.90-60.14**, 57.36

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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.



Contributing author since 10/6/17 

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