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Cattle on a Roller Coaster


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Livestock Roundup

Cattle Commentary: Cattle futures started the week on a bit of a roller coaster with February live cattle and January Feeders establishing their days trading range within the first hour of trade. February live cattle ended the day down .80, this after trading in a range of 1.30 through the session. January feeder cattle ended the day -.20, trading in a range of 2.05 on the day. Larger show lists this week are suggesting that we could see a softer cash trade. AM boxed beef came in much firmer, but some are suggesting that we could see that drift lower over the next month. Last week we saw a bulk of the trade at 121 live and 190 dressed. There were some late 188 trades Friday. Fridays Commitment of Traders report showed that funds hold a net long position of 120,083 contracts; this is a reduction of about 2,000 contracts from the previous week.

PM Boxed Beef Choice Select
Current Cutout Values: 208.19 185.54
Change from prior day: 2.20 1.93
Choice/Select spread: 22.65

Cattle Technicals

Live Cattle (February)

February live cattle traded to a low of 120.825 this morning, just a stones throw away from 120.70 which was our last line of support at the beginning of last week. This represents the 50% retracement, or the middle of the range from the August lows to the November highs, this was also resistance in the month of September. We feel like this market could hold here on the first test as the previous two sessions may have been too big of a haircut too fast. If we are able to old on the first test, it is possible that we see the market gravitate towards 123.25-123.60. This pocket was previous support defined by a Fibonacci retracement and the 50-day moving average, this is no resistance. If the market does break and close below first support, we could see additional long liquidation from the funds press us lower. 119.36 represents the 100-day moving average

Resistance:123.25-123.60***, 126.65-126.975****,131.95****

Support: 120.70***, 119.36**, 118.05***, 116-116.50****

Feeder Cattle (January)

January feeder cattle started the week out with a pop of volatility, trading down to 148.825 shortly after the open. Technical support comes in from 148.15-148.90, this was significant support at the beginning of last week and we have come off a little faster than expected. This pocket represents a 100% retracement back to the October 23rd lows, as well as the 100-day moving average. A break and close below will accelerate the selling pressure via long liquidation. There are some minor support levels below the ones already listed but nothing significant until 144.15-144.55. If the market holds support in the first half of the week, we could see a recovery from the recent selloff. The first pocket comes in from 151.75-152.075, this was previous support, now becomes resistance.

Resistance: 151.75-152.075**, 155.10-155.55***, 156.40-156.75**

Support: 148.15-148.90****, 146.85-147.35**, 144.15-144.55****

Lean Hog Commentary and Technicals (February)

February lean hog futures started the week on softer footing but quickly found buyers as we approached the mid-morning session, finishing up .975 on the day after trading in a range of 2.10. February lean hog futures are at a bigger than average premium to the cash market which could keep a lid on any significant rally in futures. Fridays Commitment of Traders report showed that funds hold a good sized long position of 63,561 contracts; this has some weak hands nervous about the potential for long liquidation. On the technical side of thing, the chart is sending mixed signals. First technical resistance comes in at 72.25, a break and close above encourages a run towards contract highs at 73.30. On the flipside, we see significant support at 69.15.

Resistance: 72-25-72.45**, 73.30****, 74.50-75**

Support: 69.15-69.70**, 68.30-68.475***, 68.45**

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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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