Cattle Commentary: Cattle futures started the day on the softer side but then looked as though we would see some short covering from those who have ridden the wave lower. The market rallied off of the lows but selling quickly came back into the live cattle futures. February live cattle finished the day -.625 at 118.65, this after trading in a range of 1.45. Feeder cattle managed to hold on for a positive close with the January contract closing up .375 to 146.50, trading in a range of 1.775 on the session. Cash trade came in at 117 today in Texas and Kansas; this is 3-4 lower from last week Dressed prices this week have come in from 186-188. Boxed beef continued its down ward trend today in choice and select.
PM Boxed Beef Choice Select
Current Cutout Values: 205.08 183.83
Change from prior day: -1.32 -.28
Choice/Select spread: 21.25
Live Cattle (February)
February live cattle have now closed six consecutive sessions lower, trimming off as much as 8.35 from the high to low in that time frame. The relative strength index is currently at 35.83, this is historically low for the cattle complex. Keep in mind that a low RSI does not mean the market needs to go higher, it suggests that consolidation at a minimum would be healthy for the market. The market has been slicing through technical levels like a warm knife on butter over the past week. 118.05 is the 61.8% retracement from the August lows to the November highs. Below there, there is not a lot of support until 116.24-116.50. On the resistance side of things, the bulls want to regain strength above the 100-day moving average at 119.37 to encourage continued consolidation towards 120.70 which represents the 50% retracement (middle of the range) from the August lows to November highs.
Resistance: 120.70***, 122.65-122.70***, 123.75**, 126.65-126.975****
Support: 118.05***, 116.24-116.50****, 109.475****
Feeder Cattle (January)
January feeder cattle managed to finish the day in the green which should make for an interesting session tomorrow. The market made a low of 144.90 today, its lowest level since September 13th. The market has technically been more oversold than the live cattle so perhaps this can spark some buying interest or at least some consolidation to round out the week (reaching for any silver lining I can find). The RSI (relative strength index) currently reads a 33.22. The 146 level represents the 61.8% Fibonacci level from the August lows to the June highs and has managed to hold on a closing basis. If the market fails to hold prices above here, we could see additional long liquidation pressure the market lower to end the year. There is not a whole lot of support until 142.
Resistance: 148.88-149.10***, 151.10-151.75**, 155.55-155.95***
Support: 145.62-146****, 144.15-144.55****, 141.65**
Lean Hog Commentary and Technicals (February)
February lean hog futures gave up a little more ground in todays session but managed to close off the lows to finish in the middle of *** support from 68.40-68.90. This pocket represents a key Fibonacci retracement level as well as the 50-day moving average. If we do see a break and close below we could see additional long liquidation. The significant level of support we are looking at comes in from 66.38-66.90. This represents the 100 and 200 day moving average, as well as the 50% retracement from the August lows to the November highs. Last weeks commitment of traders report showed funds had a long position of 63,561; we expect to see this number smaller in tomorrows Commitment of Traders report. We see that cash has been mixed to slightly lower this week which has not been helping the matter. If we continue to see lower cash and higher weights, we will have a lid on this market.
Resistance: 70.28**, 72.25-72.45**, 73.30****
Support: 68.38-68.90***, 66.30-66.90****, 65.40**
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