The December Live Cattle contract made an attempt to rally above the 120.50 resistance level at the beginning of the trading session on Tuesday, November 14, 2017. It traded up to the high of the day at 120.925 before reversing and grinding down to the low at 118.775. Buyers came back during the last 20 minutes of trading and price ended the day at 119.575. This is above the 119.15 support level as it was tested and held. This is going to be the key level for trade on Wednesday, in my opinion. A recovery from 119.15 could lead to a retest of resistance at 120.50. A rally above this area, could lead to a test of the 121.325 resistance level. Trading below 119.15 could lead to a test of support at 117.725. A breakdown from here could test support at 116.55. The negotiated cash market trade quiet on Tuesday. The fedcattlexchange.com auction is on Wednesday with 969 head for sale. Tuesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 2.14 to 210.67 and Select was down 0.34 to 193.48 on 124 loads. The choice/ select spread narrowed to a plus 17.18. The estimated cattle slaughter for Tuesday was reported at 118,000.
The January Feeder Cattle contract spent the first half hour of trade hammering away at the 155.90 156.475 support zone. It finally broke down below it and raced down to the 154.25 support level, reaching a low of 154.20. It rebounded from here, trading up to 155.35 and then it grinded lower to a new low at 154.175. Another attempt to rally failed at 155.025. It broke down from here, making a new low at 153.575. This is just below support at 153.70. It recovered from here reaching 154.15 and ended the day at 153.925. This is just above the 153.70 support level. The 154.25 153.70 area could be the key to Wednesdays trade. Above this area and price could make its way towards the 155.90 156.475 resistance zone. Below this area and price could make its way towards the 152.30 support level. Support then comes in at 149.975.
The December Lean Hogs contract sold off right from the open (62.40) on Tuesday morning, trading down to the 61.80 support level for a short while (61.925 low), broke down to 61.30 and rested for an hour before breaking down and trading down the rest of the session. It made the low at the end of the day at 59.90. This is just above support at 59.825 (August 29 low). A break down below this level could take price down towards the 58.10 support level. Holding above the low could lead to a rally to 60 60 (October 9 low) and then towards the 61.80 resistance level.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, November14 at 3:00pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
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Senior Market Strategist
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.