Futures Commentary and Analysis

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Blue Line Express: Live stock round up
Oliver Sloup - IF - Mon Nov 13, 5:44PM CST

Livestock Roundp

Email Oliver@BlueLineFutures.com or AgHedging@BlueLineFutures.com

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Cattle Commentary: The cattle complex was a choppy two-sided affair to start the week with the bears ultimately claiming victory on the session with the active months for live and feeder cattle finishing moderately lower. This afternoons commitment of traders report showed that funds added 10,800 longs, bringing their net (futures and options) position to 131,000. If the fundamental back drop were to deteriorate rapidly this would likely lead to accelerated selling pressure via long liquidation from the funds. There has been talk that traders are looking for cash to continue its decline, by how much is the big question; some are looking to get back to 119 or lower sooner rather than later. Beef demand typically slows ahead of Thanksgiving, so this could at least keep a near term lid on the market if it does not have the ability to break it down. We do have a Cattle on Feed report out at the end of the week, we hope to have our estimates in the coming days.

PM Boxed Beef Choice Select
Current Cutout Values: 213.09 194.05
Change from prior day: -.76 -.46
Choice/Select spread: 19.04

Cattle Technicals

Live Cattle (December)

December live cattle gapped lower on the open and traded in a nice 2.275 range to start the week, only to finish the day moderately lower. The relative strength index (RSI) has come well off of the recent highs and finished the day at 49.4, about as neutral as you can get. Volatile markets often times invite new participants into the market, this can and often does lead to more volatility in the market and that is what we have seen over the past two weeks in cattle. We would not be surprised to see the market enter into a short-term consolidation stage as the market looks to reset. Technical support from last weeks Livestock Roundup held well today and remains intact from 119.175-119.85. If the market does break and close below we would look for additional long liquidation from the funds to press the market down to 117.30-117.85. On the flip side, first technical resistance comes in from 121.625-122.

Resistance: 121.625-122.00**, 123.825-123.90**, 125.90-126*, 127.65-128.60***

Support: 119.175-119.85**, 117.30-117.85**

Feeder Cattle (January)

January feeder cattle spent the first trading day of the week on both sides of unchanged before finishing the day near unchanged. Technical support from 155.10-155.55 held well. This pocket represents the 50% retracement from the recent run; the October 23rd lows of 148.175 to the November 3rd highs of 162.075. If the bulls are unable to defend this pocket on a closing basis, we could see long liquidation from the funds who have a near record long position. The next line in the sand comes in at 153.475. The resent pressure in prices has brought the RSI back down to neutral levels with a reading of 52.78 at the end of the day.

Resistance: 158.70-159.27***, 160.725- 160.90**, 165.225****

Support: 155.10-155.55**, 153.475**, 152.475*

Lean Hog Commentary and Technicals (December)

December lean hogs closed lower today making it the ninth consecutive finish in the red. This is the longest streak since October of 2015 where we saw 14 consecutive closes lower trim off 15.675. Although we have not seen a positive close for the month of November, the RSI (relative strength index) is only at 44 which is relatively neutral. We have been looking at technical support coming in from 61.50-62.02, this pocket represents the 50, 100, and 200 day moving average. If the market holds here on a closing basis, we could see some near-term consolidation.

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

Support: 61.50-62.02***, 59.90-60.14**, 57.36

If you want to know more about how to best use the technical levels, please do not hesitate to reach out.

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Email Oliver@BlueLineFutures.com or AgHedging@BlueLineFutures.com

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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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