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What's next for cattle?


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Cattle Commentary: Cattle futures a two quite trade throughout the session, finishing the day marginally lower in live cattle and feeder cattle. December live cattle finished the day -.60 at 119.60 with January Feeders closing at 153.75 which was down .50 on the day. Beef export sales this morning came in at 9,300 mt, this was down 45% from the previous week and down 42% from the four week average. Cash trade was basically nonexistent today after we saw some active participation yesterday in between 119 and 120.50. It appears that many market participants are sitting on their hands as we approach tomorrows Cattle on Feed report which is due out after the close. Early estimates are for: On Feed: 106%, Placed: 108.5%, and Marketed: 105.2%.

PM Boxed Beef Choice Select
Current Cutout Values: 210.24 187.89
Change from prior day: .11 -2.78
Choice/Select spread: 19.52

Cattle Technicals

Live Cattle (December)

December live cattle posted their second consecutive inside day which is when prices stay contained within the previous days range. After the recent spike in volatility, it makes sense that we see this consolidation. Also lending a hand to consolidation is the fact that we have a Cattle on Feed report out tomorrow and some market participants may have moved to the sideline or are sitting on their hands ahead of that. The market has come into consolidation between very important support and resistance levels which will likely lead to an interesting Monday trade despite it being a holiday week. First technical support comes in from 117.70-118.25 and on the resistance side we are keeping an eye on 121.625-122.00; a close above or below this level will likely help set the tone for the remainder of the year.

Resistance: 121.625-122.00**, 123.825-123.90**, 125.90-126*

Support: 117.70-118.25***, 114.81-115.37****

Feeder Cattle (January)

January feeder cattle moved lower to test the 50-day moving average again but have held. Price action was encouraging at support but dont confuse that with bullish. The 50-day moving average has held as support since September, a breakdown and close below opens the door to continued pressure and long liquidation back towards 148. We will get an updated commitment of traders report Friday afternoon to get a better idea on where the funds stand. On the resistance side of things, 155.10-155.55 is the key pocket the bulls want to get back out above on a closing basis, this represents the middle of the range from the recent move from 148-162. A close above warrants further buying interest.

Resistance: 155.10-155.55**, 158.70-159.27***, 160.725- 160.90**

Support: 152.475-152.75****, 148.16***

Lean Hog Commentary and Technicals (December)

December lean hogs could not take advantage of yesterdays capitulation like move which is not a good sign for market. December futures traded up to 60.55, just shy of our resistance pocket from 61.60-62.00. the failure to get back out above resistance invited sellers back into the market which pressed the market right back near yesterdays lows. Though the market has sold off significantly over the course of two weeks, the RSI is only reading 40 which means more pressure is not out of the question. First technical support comes in from 59.25-59.90. Higher weights and soft demand have been dubbed the culprit for the move lower.

Resistance: 61.60-62.00**, 64.20-64.32**, 65.20-65.675***, 68.175**

Support: 59.25-6=59.90**, 57.36*, 55.775-56.20****

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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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