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Is The Bottom In?

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Livestock Roundup

September 10, 2019

Cattle Commentary

Agricultural commodities caught a much-needed break today, news that John Bolton is no longer the National Security Adviser. After that headline was one from China that stated China would be buying US agricultural products to sweeten a potential deal. At first glance this is the recycled headline we have seen many times and may not mean much, but if youve been paying attention to the trade talks you know that this is a BIG deal. Bolton was a notorious hawk and a major headwind for meaningful negotiations with China. The trade dispute with China has little to do with our exports of beef, but it does shift the overall sentiment and money flow in the Ag space.

Yesterday morning we managed to rally on the back of bad news (lower cash), outside of the final 10 minutes it was a constructive session. Today we rallied on good news, if cattle futures can feed off todays momentum and achieve follow through, we could see that help stabilize a crumbling cash market. The bottom is a process, not a point, but we believe that the process has started over the last two sessions. For live cattle futures, we continue to favor the April contract for a longer-term trade, front months will likely remain more volatile. We remain skeptical on feeders and wouldnt be as aggressive on them.

Live Cattle (December)

Resistance: 113.95-114.675****, 117.425-118.00***

Support: 111.60**, 109.375-110.175****

Feeder Cattle (November)

Resistance: 132.50-135.80**, 135.25-136.30***

Support: 127.325-127.975

PM Boxed Beef / Choice / Select

Current Cutout Values: / 225.38 / 200.98

Change from prior day: / (1.57) / (.94)

Choice/Select spread: / 24.40

Lean Hogs (December)

In the above section we talked about what the departure means for trade negotiations with China, hogs did a stutter step before taking off. December hogs finished the day up 2.225, 4.40 off the lows. As mentioned in yesterdays report the market remains range bound, listing the bottom end of the range as 58. If the bulls can achieve a continuation of todays strength, we could see prices right back at the top end of the range, near 67.50.

Resistance: 66.525-67.275****, 70.275-70.50***

Pivot: 62.50

Support: 57.775-58.625***

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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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