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January Feeder cattle saw a higher trade to round out the week, finishing the day .50 higher after trading in a range of 1.825. February live cattle futures closed .925 lower on Fridays abbreviated trading session after trading in a range of 1.05. There were some cash trades through the week that got up to 120.50. We will be interested to see how this week’s cash and futures trade develops as we should get more activity. We look for volume to confirm price and we saw a lack of that with the Thanksgiving holiday. On the technical side of things, the market managed to find support last week at from 122.40-122.75. This pocket represents the 50-day moving average, an indicator we have not closed below since the first week in September. More importantly, this represents previous resistance in May, June, and the first half of October. On October 24th the market broke out above this level which invited momentum traders into the market to extend the rally to 131.95 in just 9 sessions. On the chart, there has been damage done over the last three weeks, but the bulls remain in control as the market has managed to mark higher lows for the time being. The RSI (relative strength index) has come well off of its overbought levels and is currently a hair above 48 which is about as neutral as it gets. The weekly Commitment of Traders report has been delayed until Monday (due to the holiday). Last week’s commitment of trader’s report showed that funds held 131,830 long positions. Although that number is likely shrunk some, there is thought to still be a good sized net long position in place.
February lean hogs finished Fridays session up .575 to 69.675, trading in a range of .825 on the day. Talk of higher weights and ample supply will continue to be a concern as we look to the last month of the year. Weekly average weights were down slightly from the previous weeks (why we saw a modest recovery) but we are still up 1.4% from the previous year. On top of that, slaughter numbers could come in 3-4% above last year in the coming weeks. On the technical side of things, the market found tremendous support from 66.20-66.90. This pocket represents the 100 and 200 day moving average, along with the 50% retracement (middle of the range) from the August 30th lows to the November 1st highs. The market has been posting lower highs and lower lows since that peak on November 1st which puts the bears in control in the near term. Technical resistance comes in from 70.28-70.675.
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