The October Live Cattle contract broke down at the open and tested support (106.20) on Wednesday, September 13, 2017. It traded down to a low at 105.40, consolidated just above it and started to rally at the time of the fedcattleexchange.com auction. Price strengthened throughout the day, reaching the high (107.75) at the end of the session. A breakout above the Wednesday high could see price test the 108.675 resistance level. Continued strength could see movement towards the 110.80 resistance level. A trade below the 106.20 support level could see the 104.875 support level tested. Support then comes in at 103.00. The negotiated cash market was quiet. The fedcattleexchange.com auction took place with 1,063 head for sale. There were 3 lots traded at 104.75 during the auction, but only one was accepted. Cash remains stagnant with packers refusing to budge as minimum bids of 105.00 were ignored and bidding took place from the 103 and 104 levels with the afore mentioned 104.75 level traded. Wednesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 0.39 to 190.40 and Select down 2.17 to 188.69 on 157 loads. The choice/ select spread popped from yesterday’s -0.07 to a plus 1.71. The estimated cattle slaughter for Wednesday was reported at 117,000.
The October Feeder Cattle contract opened lower and broke down below the 100 DMA (148.45), making the session low at 147.35. It snapped back off the low and rallied the remainder of the day trading through the 149.975 resistance level, reaching a high at 150.25. It dipped below the resistance level and ended the day at 149.80. It formed an outside day candle, as the Wednesday range was wider than the Tuesday session. The 100 DMA and the 149.975 resistance level were both pierced with the market snapping back in between them, showing the difficulty in fighting the support and resistance levels. A rally above the 149.975 resistance level could see price test the 151.725 high from August 3rd and then the 152.30 resistance level. A break down below the 100 DMA could see support tested at 146.20.
The October Lean Hogs contract gap opened lower and traded down towards the 58.10 support level, making the low at 58.25. It bounced from the low and rallied to the high at 59.975, just below trendline resistance at 60.125. A pullback at the end of the day took Hogs down to Tuesday’s low (59.225), and the day ended at 59.35. It formed a spinning top candle and continued weakness could see price break down below support at 58.10. Support comes in at 56.15 and the 54.80. A breakout above the Wednesday high could see price close the gap at 61.25 (Monday low). Resistance then comes in at 61.80.
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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.