Tag: feeder cattle

CORN (March)

Yesterdays Close: March corn futures closed 3 ¾ cents lower to start the week, trading in a range of 4 ¾ cents on the day.

Fundamentals: Export inspections yesterday came in at 849,226 metric tons, this was just above the top end of expectations from 500,000-800,000 metric tons and up from 683,000 metric tons in the previous week. There was a sale of 102,100 metric tons sold to Mexico. There is nothing new to report in terms of weather or crop development in South America. Fridays USDA report will be the big-ticket item this week as we get final looks at US production. We will continue to compile estimates and hope to have those for you before Friday.

Technicals: If you had sold the 50-day moving average last week near 354, yesterday’s action gave you an opportunity to reduce or clear the slate. Support has held on the first test which comes we have been defining as 345-346 ½. We continue to feel there is an opportunity to be a trader a nickel on either side of 350 as that has been the trend for front month contracts; 350 was a magnet for December futures too. At the bottom end of the range we are changing our bias from neutral/bearish to neutral. If you want to be long this market, this isn’t a terrible spot; you just need to have your risked managed because a close below contract lows opens the door to another 10 cents lower.

Bias: Neutral

Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: March soybean futures closed 2 ¾ cents lower yesterday, trading in a range of 11 cents on the session.

Fundamentals: Yesterdays export inspections came in at 1,183,089 metric tons, this was within the expected range from 1,000,000-1,300,000 metric tons and was identical to the previous weeks 1,139,436 metric tons. There were sales of 132,000 metric tons to unknown and another 120,000 metric tons to Egypt. South American weather and crop development will continue to be monitored, there is nothing new to report this morning. Fridays USDA report will be what traders and other market participants are really looking forward to, this will give us a final look at US production and hopefully more clarity on market direction.

Technicals: The market has not made it easy for short term futures traders as we have been in a whipsaw trade. Trading in wider ranges intraday, only to finish closer to unchanged over the previous three sessions. We feel the market is in a bit of a “no man’s land” here but like the prospects of higher prices. We aren’t’ the most enthused about futures here but think cheap call options are a viable way to play the market here. If the market were to breakdown closer to 950 ahead of the report, that is the spot to consider futures. On the resistance side, we don’t really have an interest in looking short until we see how resistance holds up from 986-989. This pocket represents the 50% retracement from the June lows to the July highs, as well as the 50 and 100 day moving average.

Bias: Neutral

Resistance: 971 ¾**, 985 ¼-986 ½***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures finished the first day of the week down 4 cents, trading in a range of 6 ½ cents on the session.

Fundamentals: Export inspections yesterday morning came in at 234,418 metric tons, this was towards the low end of the expected range from 200,000-400,000 metric tons and was also below the previous weeks 274,000 metric tons. Cold and dry weather helped support the market last week, but that premium is slowly working its way out of the market. This is so far fitting in with the 15-year seasonal trade we mentioned at the start of the year. If you had sold wheat on January 3rd and bought back on January 16th, you would have been profitable for 12 of the last 13 years with the average gain being roughly 17 cents.

Technicals: The market failed to get out above the 50-day moving average last week with conviction which kept the bear camp in control. The evaporation of weather premium has prices coming back near first technical support. 416 ½-420 ¾ is the first pocket we are looking at. If you had sold the seasonal/technical resistance, this is the area you want to look at reducing or flattening. A break and close below could open the door to extended pressure towards 410 ½, a retest of the December 12th contract lows.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 416 ½-420 ¾**, 410 ½**, 399-402 ¾****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

Cattle Commentary: Cattle futures were both sides of unchanged today, starting the morning session with an attempted breakout which led to an ultimate failure by the end of the day. February live cattle futures finished down .85 at 122.10, trading in a range of 1.525 on the session. As mentioned yesterday, funds are starting to roll some and volume is picking up in April, which finished down .725 at 123.65. March feeders finished the day down 1.725 at 145.10, trading in a range of 3.525. spreads are wide with bids at 121 and offers at 126. There was a small reginal that payed 125 in the north today, that is two over the bulk of last week’s trade. As mentioned in yesterday’s report, futures prices are opportunistic for hedgers and speculators. Boxed beef was up again today.

PM Boxed BeefChoiceSelect

Current Cutout Values: – 208.67 – 200.86

Change from prior day: – .05 – 1.70

Choice/Select spread: – 7.81

Cattle Technicals

Live Cattle (February)

February live cattle attempted to break out of our major resistance pocket from 123.35-123.80 for the third session in a row. If you’ve been reading our reports you know that this represents a key Fibonacci retracement from the August lows to November highs, the 50-day moving average, and more importantly a breakout point from October 24th and a breakdown point from December 1st. The inability to breakout led to long liquidation from funds which opens the door to our target of 120.20-120.70. This represents the middle of the range from the August lows to the November highs, as well as the 100-day moving average. If this holds it will set the bulls up in a good spot, marking higher lows with potential higher highs to follow.

Resistance: 123.35-123.80****, 126.65**, 131.95**

Support: 120.20-120.70**, 119.85***, 118.05-118.15**

 

Feeder Cattle (March)

March feeder cattle looked destined to test resistance from 149.10-149.40 but ran out of gas in the afternoon, posting a high of 148.55. The inability to sustain momentum gave funds an excellent opportunity to liquidate some long positions after climbing 9.95 in the last 7 sessions. We think this liquidation could continue to fill the gap from 143.05-143.55. that pocket needs to hold on a closing basis to encourage a firm trade going forward. A failure could lead to a retest of the 200-day moving average which now comes in just shy of 140.

Resistance: 146.45-146.95**, 149.10-149.40***, 153.175-154.05***

Support: 143.05-143.55***, 139.85**, 138.30-138.75****

 

Lean Hog Commentary & Technicals

Lean hog futures traded both sides of unchanged today, with February futures finishing up .45 at 71.50, trading in a range of .975. Prices remain at the top end of the range with first resistance coming in from 72.25-72.45, above that is contract highs at 73.30. We continue to believe that there is limited near term value at these prices and a failure to breakout will lead to long liquidation. A breakdown and close below support from 70.20-70.30 opens the door to accelerated selling, pressing prices back to the bottom end of the range which comes in from 66.70-67.05. This pocket represents the middle of the range from the August lows to the November highs, as well as the 200-day moving average. A hair above that is the 100-day moving average which comes in at 67.40

Resistance: 72.25-72.45***, 73.30****, 74.50-75**

Support: 70.20-70.30**, 68.30-68.475***, 66.70-67.05****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

BrokersEDGE Livestock News Recap 12-3-18

Cattle Commentary: Cattle futures were mixed today with front month futures trading lower to the deferred higher prices; this indicates that managed money is now starting to roll some of their net long positions out. February live cattle finished the day down .475 at 122.875, trading in a range of .975 on the day. March feeder cattle were .225 lower at 146.65, trading in a range of .975 on the session. Todays Fed Cattle Exchange had 388 offered but yielded zero sales. The bulk of last week’s cash trade came in around 123, there have been calls for 1-2 higher, we don’t see much more than 1 at this point. Colder temperatures have helped offer support to the market but forecasts are turning “warmer” through some key areas which will start to help with weight gain. Boxed beef has been working higher yet again.

PM Boxed Beef Choice Select

Current Cutout Values: 208.62 199.16

Change from prior day: 3.48 2.59

Choice/Select spread: 9.46

 

Cattle Technicals

Live Cattle (February)

February live cattle futures struggled again to get traction above our resistance pocket from 123.35-123.80. If we fail to breakout above this pocket in tomorrow’s session we will be looking for futures to retreat back towards 120.10-120.70; this pocket represents the 100-day moving average and the 50% retracement (middle of the range) from the August lows to the November highs. We look at this as an opportunity to reduce long exposure and leg back into some hedges. If the bulls can achieve a conviction close above resistance tomorrow there is not a lot stopping the market from running to 126.65-126.775. This pocket represents a key Fibonacci retracement along with previous highs from the failure at the end of November.

Resistance: 123.35-123.80****, 126.65**, 131.95**

Support: 120.65-120.775**, 119.85***, 118.05-118.15**

 

Feeder Cattle (March)

In yesterday’s report we mentioned there being an opportunity to reduce long exposure in our resistance pocket from 146.45-146.85, we continue to believe that to be the case. This pocket represents the middle of the range from the August lows to November highs as well as the 100-day moving average. The market finished the session in-between our pocket after failing to take out yesterday’s highs. If the market fails to achieve a conviction close above resistance, we could see some long liquidation from funds who have capitalized on a very nice run over the past two weeks. A failure opens the door to close the gap at 143.05-143.55.

Resistance: 147.175**, 149.15-149.40***, 153.175-154.05****

Support: 143.05-143.55***, 139.85**, 138.30-138.75****

 

Lean Hog Commentary & Technicals

February lean hog futures took a stab at our first technical support at 70.30 but failed to see follow through selling, marking a low of 70.20. Futures ended the day up .35 at 71.075, trading in a range of 1.00 for the session. Colder temperatures are said to be helping support the market but intermediate term fundamentals could be keeping a lid on any significant rally from here. Although we did finish off the lows we are still skeptical of how much more room this market can run to the upside. Key technical resistance comes in from 72.25-72.45, a failure to break out above this pocket could lead to long liquidation from the funds and press us back towards the low end of the range near 67 which is our target for the time being.

Resistance: 72.25-72.45***, 73.30****, 74.50-75**

Support: 70.30**, 69.35**, 68.30-68.475***, 66.30-66.90****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW

BrokersEDGE Livestock news recap 1-2-18

Cattle Commentary: Cattle futures finished the last trading day of the year in the red with February live cattle futures closing .70 lower at 121.625, trading in a range of 1.375 with respectable volume. For the week, February futures closed up 3.375. Cash cattle trade through the week was non-existent with bids from 118-119 and offers at 125-126. The buyers and sellers found common ground at 123 after the futures closed, this was up from 119/120 in the previous week. Colder temperatures have helped offer some support to the market as it tends to slow down the weight gain. Boxed beef was also up Friday. Fridays weekly Commitment of Traders report showed funds are net long 82,738 contracts. Keep in mind that this data is compiled through Tuesdays session.

PM Boxed Beef Choice Select

Current Cutout Values: 202.90 192.98

Change from prior day: .62 2.07

Choice/Select spread: 9.92

 

Cattle Technicals: On the technical side of things, we have been marking higher highs and higher lows over the last three weeks which is constructive. We are still looking for futures to make a run towards 123.35-123.70. This pocket represents a key Fibonacci retracement as well as the 50-day moving average. This was also a breakout point on October 24th and a breakdown point on December 1st. A conviction close above could encourage funds to extend their net long position and press prices towards 126.65. On the support side of things, the bulls need to defend a wide pocket from 119.85-120.70 on a closing basis. This represents the middle of the range from the August lows to the November highs as well as the 100-day moving average

Bias: Neutral/Bullish

Resistance: 123.35-123.70****, 126.65**, 131.95**

Support: 120.65-120.70**, 119.85***, 118.05-118.15**

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/ 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

Cattle Commentary: Cattle futures gapped open to start the week on follow through momentum from Fridays session. That was enthusiasm was short lived as prices retreated for the remainder of the day. February live cattle futures finished the day -.30 at 120.725 after trading in a range o f 1.875. Despite trading lower today, we still remain in a seasonally strong time of year. In fact, if you had bought February live cattle on December 13th and held to December 28th for the past 15 years, you would have been profitable for 14 of them with the average gain being 2.41. January feeder cattle squeezed out a .05 gain finishing at 147.80, they traded in a range of 2.200 on the day. Fridays Commitment of Traders report showed that funds reduced 17,262 live cattle contracts. We saw some decent cash trade late Friday from 120.00-120.50. Cash trade will continue to be monitored closely this week, but Fridays Cattle on Feed and Cold Storage report will be big events. Fridays reports will be released during the trading day which could shake things up a bit considering we could see a thinner volume with Christmas right around the corner. We will have our estimates for these reports in the coming days.

PM Boxed Beef Choice Select

Current Cutout Values: 203.15 185.01

Change from prior day: 1.28 1.76

Choice/Select spread: 18.14

 

Cattle Technicals

Live Cattle (February)

Fridays session was constructive with a close above 120.70, a level we have been keeping an eye on for the past month; this represents the middle of the range from the August lows to the November highs. Though futures closed lower, we did hold this level on a closing basis which could encourage some buying activity. If the market can continue to firm up, we could see the market make a run towards 123.35-123.80. This pocket represents a key Fibonacci retracement level as well as the 50-day moving average. On the chart you can also see that this was the breakout level on October 24th and the breakdown level on December 1st. If you have bought the market or reduced hedges over the last week, this would be your exit target. We know that funds have been reducing their long position over the past several weeks and a failure to break out above resistance will lead to additional long liquidation. Ultimately, we expect the market to consolidate into a “tighter” range as we round out the year.

Resistance: 123.35-123.80****, 126.6**

Pivot: 120.70

Support: 119.45***117.575**, 116.24-116.80****

 

Feeder Cattle (January)

January feeder cattle finished the day lower but managed to close off of the lows. The market failed against last week’s technical resistance from 148.85-149.075, this pocket represents the 100-day moving average and the 50% retracement from the August lows to the November highs. If the market can achieve a conviction close above this pocket we could see momentum buyers step back into the market and press us towards 152.25-153, this pocket represents the 50-day moving average and a key Fibonacci retracement level. If the market cannot gain traction above first resistance, it is possible we see funds continue to liquidate their long positions and press us back towards the bottom end of the recent range near 145. The RSI (relative strength index) has worked itself back towards neutral levels with a reading of 43.

Resistance: 148.85-149.075***, 152.25-153.00**, 155.55-155.95***

Support: 146**, 144.15-144.55****, 142.15-142.60***, 136.10**

 

Lean Hog Commentary & Technicals

February lean hogs opened up on a higher note to start the week, but that enthusiasm faded as markets not only went negative, but also gave up nearly all of the gains from Fridays session. The technical reversal appears to be putting the bears in a good position to start the week. First technical support comes in from 66.50-66.90, this pocket represents the 100 and 200 day moving average, as well as the 50% retracement from the August lows to November highs. Stable cash has been a catalyst for the recent support, but we feel other fundamentals such as weights will keep a lid on any significant rally. We also have a Cold Storage report on Friday, this will be during market hours and could have a big impact on prices over the intermediate term.

Resistance: 68.40**, 69.125***, 70.28**, 72.25-72.45**

Support: 66.50-66.90****, 65.40**, 64.75**

 

 

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

 

 

 

Disclaimer:

 

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

BrokersEDGE 12-15-17 Livestock recap

Cattle Commentary: Last week we had mentioned that February live cattle were coming into a seasonal buy from December 13th to December 28th. Over the last 15 years this has been profitable 14 of those years with the average gain being 2.41. So far that seasonal looks to be holding true as cattle found support after being in free fall mode for the previous two weeks. February live cattle finished Fridays session up 2.05 at 121.70, trading in a range of 2.775 on the day. January feeder cattle finished Friday up 1.70 at 147.95 after trading in a range of 3.175 on the day. For the week, both live cattle and feeder cattle closed higher adding 2.90 and 2.60 respectively. Cash trade was nonexistent through the first ¾ of the week, but bids were creeping higher all-day Friday. There were cash trades at 120.50 after the close in Wyoming, western Nebraska, and Colorado. In Kansas and Texas, we saw trade at 120. This should offer some support to the market to start the week, but how long it stays will be the question.

Technically Speaking: We had been writing about the market making a run back towards 120.70 for the February contract, this was the 50% retracement from the August lows to the November highs. The close above and sturdy fundamentals could encourage additional momentum higher towards the next resistance pocket from 123.355-123.825. This pocket represents another key retracement level and the 50-day moving average. On the chart you can also see that this was the breakout level on October 24th and the breakdown level on December 1st. If you have bought the market or reduced hedges over the last week, this would be your exit target. We know that funds have been reducing their long position over the past several weeks and a failure to break out above resistance will lead to additional long liquidation. Ultimately, we expect the market to consolidate into a “tighter” range as we round out the year

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/ 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

CORN (March)

 

Yesterdays Close: March corn futures traded lower by ¼ cent yesterday, trading in a range of 2 ¾ cents on the session. Funds were estimated sellers of 1,000 contracts.

 

Fundamentals: Yesterdays export sales came in at 866,900 metric tons, this was within the range of estimates from 700,000-1,100,000 metric tons and slightly lower than last week’s 876,400 tons. The market is wanting to see a string of better than expected data to start trending prices off of the bottom. We’ve had great ethanol reports recently and in line export expectations, and we are still at contract lows which is concerning for the bull camp. There is some weather premium in the market (though hit doesn’t feel like it since we are at the low), if forecasts turn more favorable for corn we could see more aggressive selling come into the market.

 

Technicals: 350 has been a magnet for the front month corn contract over the past several months and we think will continue to be. We feel there is opportunity to play a nickel of either side of the market but really want to see a new directional move (other than sideways). 345 is the line in the sand we are watching, if the bears can achieve a break and close below, we could see accelerated selling pressure press prices down towards 335. On the top side, 355-357 ½ is the pocket we would be looking to sell against. This represents recent highs, previous support, and the 50-day moving average, an indicator we have not closed above since July. We remain neutral until we see a change in fundamentals and technical confirmation of a breakout or a breakdown.

 

Bias: Neutral

 

Resistance: 355-357 ½ ****, 369 ¼-370 ½***, 375****

 

Support: 345-348**, 334-335 ½***, 323-325 ¼**

 

 

 

SOYBEANS (January)

 

Yesterdays Close: January soybean futures closed 13 cents lower yesterday, trading in a range of 14 ½ cents on the session. Funds were estimated sellers of 9,000 contracts.

 

Fundamentals: Yesterdays export sales number came in at 1,452,700 metric tons, this was on the low end of the expected range from 1,400,000-2,000,000 metric tons and well below last week’s 2,015,794 metric tons. As with corn and wheat, the market needs to see better than expected export sales to support the market; within expectations doesn’t mean what it used too. NOPA crush today is expected to come in between 161-165 million bushels, this report will be out at 11 am cst. Weather in South America will continue to be important, there are no significant changes in forecasts to report at this moment. Technicals: Soybeans shaved off 13 cents yesterday, marking the sixth close lower in seven sessions. In those seven sessions we have seen as much as 47 ¾ taken off prices from high to low. That brought the RSI (relative strength index) near oversold. The market has found some bargain buying and short covering in the overnight and early morning session. Yesterday we were talking about 967-968 ¼ being significant support and a buying opportunity on the first test. This represents the November 14th lows as well as a key retracement from the June lows to the July highs. This must hold for the bulls; a breakdown below leads to long liquidation and could easily take another 20 cents off prices. On the resistance side of things, there are several hurdles to get over. The first being then 100 and 200 day moving average which was previous support for us, this pocket comes in from 976-978 ¾.

 

Bias: Bullish

 

Resistance: 976-978 ¾***, 984 ¾-989**, 999-1004**

 

Support: 967-968 ¼****, 962 ½-963 ¼**, 947 ½**

 

 

 

WHEAT (March)

 

Yesterdays Close: March wheat futures closed 2 ¼ cents lower yesterday, trading in a range of 4 ¾ cents on the day. Funds were estimated buyers of 2,000 contracts on the day.

 

Fundamentals: Export sales yesterday came in at 588,000 metric tons, this was above the range of expectations from 250,000-450,000 metric tons and the biggest read we have seen in over a month. As mentioned with corn and beans, the bulls need to see a trend of better exports, not just one beat a month. We continue to believe that global supplies and poor demand will keep a lid on any significant move to the upside, ultimately creating sell opportunities on bounces.

 

Technicals: Wheat market staged two consecutive positive closes, this is nothing to get remotely excited about. We continue to feel that rallies are to be sold, but we are waiting for higher prices to add to the short side. 424 ¼ is the first line in the sand with other significant levels coming in nearly 15 cents above that. Any rally will likely be made up of short covering and not new buying. We continue to feel that the market has the potential to see prices with a $3 handle over the intermediate term.

 

Bias: Bearish

 

Resistance: 424 ¼**, 430 ½-433 ½**, 443-445¾ ****

 

Support: 399-402 ¾****, 392-394**, 381-383 ¾***

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

 

 

 

Disclaimer:

 

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

 

Cattle Commentary: Cattle managed to squeeze out a positive day with the January feeders finishing up .45 at 146.10 after trading in a range of 1.55 on the day. Live cattle saw bigger gains with the February contract closing up 1.000 at 119.375, the trading range for the session was 1.675. Cash cattle trade has been quiet, but it appears things are starting to firm which is supporting futures. Yesterdays Fed Cattle Exchange had 704 head offered, only 75 sold at 116 with other bids being passed on at 116. Asking prices are still in the 118-ball park. It would be great to get some cash trading before the weekend to prevent a touchy Monday trade. As mentioned earlier in the week, we are now in a seasonal trend with the February live cattle contract. If you had bought February live cattle on December 13th and sold on December 28th, you would have been profitable 14 out of the last 15 years with the average gain being 2.41.

 

PM Boxed Beef Choice Select

Current Cutout Values: 201.04 183.69

Change from prior day: -1.44 -1.33

Choice/Select spread: 17.35

 

Cattle Technicals

Live Cattle (February)

Live cattle futures staged another inside day which means they were contained within the previous day’s range; this marks the second consecutive day of this. The market found support from the 61.8% Fibonacci retracement from the August lows to the November highs that comes in at 118.05. On the top side, the 100-day moving average at 119.375 has been the barrier the bulls have struggled to regain on a closing basis. If they bulls can attract new buyers above this level, we expect to see the market run back towards 120.70 which represents the middle of the trading range over the last four months. We know that funds still have a large net long position, a failure to get back above resistance level could trigger some long liquidation from the funds. A close back below 118.05 opens the door to the 200-day moving average at 116.65.

Resistance: 119.375**, 120.70***, 123.35-123.80****

Support: 117.575**, 116.24-116.65****, 114.375**, 109.475****

 

Feeder Cattle (January)

Feeder cattle have been consolidating all week along the 146 mark which represents the 61.8% Fibonacci retracement from the August lows to the November highs. If the market can hold ground above this level into the weekend, perhaps we see more buyers step in and press us back towards 148.90-149.075 which represents the 100-day moving average and the 50% retracement (middle of the range) from the previous four months. A conviction close back below the 146 level opens the door to the risk of accelerated selling pressure via long liquidation, the next line in the sand doesn’t come in until 142.60. This week’s consolidation has brought the RSI to 37, which is off of oversold levels but still on the low end of what is usual for this market.

Resistance: 148.85-149.075***, 152.10-152.475**, 155.55-155.95***

Pivot: 146

Support: 144.15-144.55****, 142.15-142.60***, 136.10**

 

Lean Hog Commentary and Technicals (February)

Lean hog futures saw a wide trading range today which squeezed some of the recent shorts. The February contract managed to finish the day up .90 at 67.70, this after trading in a range of 2.45 on the day. The markets inability to really breakdown below the 200-day moving average at 66.40 likely helped spark some of this rally, but bulls should temper expectations. We feel that the bears still have control from the fundamental and technical side of things. Key technical resistance comes in at 69.125, this represents a selling opportunity on the first test. A breakout and conviction close above would neutralize the chart. The RSI is currently at 45 which is essential neutral.

Resistance: 68.40**, 69.125***, 70.28**, 72.25-72.45**

Support: 66.40-66.925****, 65.40**, 64.75**

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

Cattle Commentary: Cattle futures were mostly lower yet again today. January feeders were the “bright spot” finishing the day up .05 at 145.275, trading in a range of 1.825. February live cattle finished the day -.675 at 117.625, this after trading in a range of 1.30 on the day. Todays close marked the 8th consecutive close lower, which puts prices at a 9.05 discount during that same time. Last weeks cash trade was mostly 117-118 with dressed at 187-188. Low prices often times cure low prices, meaning demand picks up as prices fall. Some analysts are suggesting that we could see that demand come in and offer near term support. This weeks Fed Cattle Exchange has 704 head offered, that will be on Wednesday morning. Fridays commitment of trader’s report showed that funds reduced roughly 4,000 contracts putting their net total at 116,000. On the feeder cattle side of things, funds were said to have reduced 1,000 contracts which puts their net long at 13,200 contracts.

PM Boxed Beef Choice Select

Current Cutout Values: 205.53 185.66

Change from prior day: -.06 -.31

Choice/Select spread: 19.87

 

Cattle Technicals

Live Cattle (February)

February live cattle have been under a lot of pain over the past two weeks. As mentioned above, we have taken 9.05 off of prices in just 8 sessions. This pressure has brought the RSI (Relative Strength Index) below 30 for the first time in its contract life. The low RSI suggests that the market could be nearing exhaustion levels and we tend to agree. Though it’s not a sure thing, we feel a consolidation or relief rally would be healthy. We also see a seasonal trend around the corner for the February contract. Buying on December 13th and selling on December 28th has been profitable 14 of the last 15 years with the average gain being 2.40. Technical support levels have been nearly non-existent as long liquidation from the funds continues to pressure things. The 200-day moving average is the next line in the sand on the support side, that doesn’t come in until 116.40. On the resistance side of things, the 100-day moving average comes in at 119.35, ultimately, we are looking for a move back to 120.70.

Resistance: 119.35**, 120.70***, 122.65-122.70***

Support: 116.24-116.50****, 109.475****

 

Feeder Cattle (January)

January feeder cattle were the bright spot in todays trade as they attempt to consolidate near 145. Though we finished the day slightly positive, the market remains near oversold levels with the RSI reading 31.90. First resistance comes in from 145.60-146, if you recall, this was previous support last week. On the support side of things, the market really wants to see today’s lows hold, if that gives way we could see additional long liquidation towards the 200-day moving average at 142.25

Resistance: 145.60-146****, 148.88-149.10***, 151.10-151.75**, 155.55-155.95***

Support: 144.15-144.55****, 141.65-142.25***

 

Lean Hog Commentary and Technicals (February)

February lean hog futures took a hit today after failing to get out above the 50-day moving average at 69.15 (todays high was 69.12). February futures ended the day down 1.5 to finish at 67.35, this after trading in a range of 2.20. We have been looking for a retest of the 100 and 200 day moving average as well as the 50% retracement which all come in from 66.40-66.92; todays low was 66.925. A break down and close below this support pocket could accelerate selling towards 65.40 which represents a key Fibonacci retracement level. Heavy weights and lighter demand have been keeping a lid on any significant rally and will likely continue to. Fridays commitment of trader’s report showed that funds increased their net long position by 5,000 contracts to 72,000 contracts; keep in mind this information is compiled through Tuesday and does not take into account the back half of the week.

Resistance: 68.38-68.90***, 70.28**, 72.25-72.45**

Support: 66.40-66.92****, 65.40**, 64.75**

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

February live cattle closed .55 lower on Friday marking the 7th consecutive close lower. Futures are off 13.85 since we marked contract highs 24 sessions ago. It is interesting to note that 24 sessions prior to marking those contract highs we were trading at the exact same price as last Fridays trade. Lower cash prices and long liquidation from the funds have certainly been two key catalysts in the recent decline. Cash prices were lower with a bulk of the trade from 117-118.50. Fridays Commitment of Traders report showed that funds reduced roughly 4,000 live cattle positions to put their net long at 116,000. Fridays report also showed that the funds net long Feeder position was reduced by roughly 1,000 to 13,200; keep in mind that this data is compiled through Tuesdays session and does not account for the back half of the weeks trade.

 

On the technical side of things, the cattle complex is more oversold than it has been in a long time which leads us to belief that a relief rally or consolidation would be healthy for the market. The relative strength index (RSI) is at 30.80, the most oversold this February contract has ever been. Last week we talked about 118 being a key support level, representing a key Fibonacci retracement level from the August lows to the November highs. A break and close below could encourage additional long liquidation towards 116.35. On the resistance side of things, 119.35 is the first line in the sand, this represents the 100-day moving average. A close above opens the door to a run back towards 120.70 which is the middle of the range from the August lows to the November highs. This week’s trade will certainly be interesting to watch, both technically and fundamentally.

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

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