Last Trades:
LEZ8: .25 at 117.05, trading in a range of 1.025
LEG8: 0.00 at 122.30, trading in a range of 1.10
GFF9: 2.05 at 150.15, trading in a range of 2.40
GFH9: 1.60 at 148.175, trading in a range of 1.825
Cattle Commentary: December live cattle opened higher today, tagging yesterday’s high to a T before retreating shortly after. That early trade was enough to mark the 14th consecutive day we have seen 117.35 traded. We keep bringing this up because we believe it is important for traders and other market participants to temper their expectations, it doesn’t matter if it’s the cattle market or toilet paper futures. There were reports of some cash trade coming in from 112-114 with reports that 114 was passed on in Nebraska. Today’s Fed Cattle Exchange had no sales, with just a few hundred head offered. October went off the board at 116.00 which is a silver lining for the bull camp.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 216.93 / 204.03
Change from prior day: / 1.33 / 1.15
Choice/Select spread: / 12.90
Tech Talk
Live Cattle (December)
Cattle continue to trade in their relatively tight range which makes the technical section a little redundant. December futures have traded 117.35 for 14 consecutive sessions now. We still feel that there is value to buy near technical support, we have defined that as 116.00-116.75. If the bulls cannot get any momentum off of this level before the weekend it will be a technical headwind. Yesterday’s high was matched to a T this morning that comes in at 117.725. We believe a retest here will likely send the market towards the higher end of the recent range, a level we have defined as 118.975.
Resistance: 117.725**, 118.975***, 119.75-120.10***
Support: 116.00-116.75***, 114.15-114.875****
Feeder Cattle (January)
January feeder cattle recovered all of yesterday’s losses and a little more after holding key support from 147.50-147.85. This recovery does not change the tide just yet. As mentioned in the first two reports of the week, the bears remain in control until consecutive closes above 150.50-151.15. This means tomorrow could be a pivotal session. If the bulls cannot achieve follow through to round out the week, there will likely be an opportunity to get aggressive on the short side with a defined limited risk.
Resistance: 150.50-151.15**, 152.00-152.425****, 153.75-154.00**
Support: 147.50-147.85***, 144.525-145.10****
Lean Hogs (December)
Lean hog futures poked their head into our resistance pocket which we defined in yesterday’s report as 59.95-60.25 but fell short, marking a high of 60.20. For the day, December futures finished down .40 at 58.60, trading in a range of 2.00. The inability to achieve a true breakout led to long liquidation. Over the past few sessions we have been recommending selling calls against futures if you have been long, we continue to believe that is a prudent thing to do in this market environment. Key support to wrap up the week comes in from 57.075-57.60. If you reduced risk against resistance, this would be the spot to consider putting that exposure back on.
Resistance: 59.95-60.25****, 65.275**
Support: 57.075-57.60**, 54.50-55.10***, 53.25-53.70***
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