Cattle Commentary: Wednesdays trade started out relatively tame but turned south towards the end of the session. April live cattle finished the session down 1.425 at 122.75, trading in a range of 1.725. March feeders were down 2.375 at 144.80, trading in a range of 2.65. The bulk of this week’s cash trade has come in at 126 and some sales that pulled back to 125. Packers have decent inventory which give them a slight advantage here. We have been very clear with our stance on the market being mostly range bound until we get a new fundamental catalyst to give us that breakout or break down that the perma-bulls and perma-bears keep talking about.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 210.06 / 204.32
Change from prior day: / .37 / (.05)
Choice/Select spread: / 5.74
Cattle Technicals
Live Cattle (April)
April live cattle finished the session in our first support pocket which we had outlined as 122.475-122.75, making todays trade and close more meaningful for setting the tone over the next week. This pocket contains the 50 and 100 day moving average, a key Fibonacci retracement, and a some previously significant price points. If we o see a break and close below, we expect to see a move towards 120.20-120.625. This would be the spot where we consider working with clients on the buy side regardless if they are a bull or a bear (buy back shorts/start establishing a long position). There is significant support below this pocket at 117.90-118.70.
Resistance: 125.20-125.35***, 127.20-127.35***, 130.10****
Support:122.475-122.75***, 120.20-120.625****, 117.90-118.70****
Feeder Cattle (March)
March feeders broke down and closed below first support, that will now become resistance in today’s session; that comes in at 146.45. We continue to feel that there is likely a little more room to wiggle down. 143.35-143.50 is a pocket we are keeping a very close eye on. This pocket represents trend line support from the December lows, the 200-day moving average (We have traded but never closed below in this March contract), and a key Fibonacci retracement. If the market does break and close below it is likely we see accelerated selling pressure press us down towards 139.85.
Resistance: 146.45**, 147.85-148.00***, 149.40-150.00***, 153.95*****
Support: 143.35-143.50****, 142.10-142.60**, 139.85-140.125***
Lean Hog Commentary & Technicals (April)
April live cattle futures continue to be under pressure, finishing the session down .75 at 72.15, trading in a range of 1.30. If the market cannot find footing, we expect to see long liquidation open the door to a run at 70.625-71.15. We have been pretty clear about liking the short side in this market against technical resistance. Now that we are approaching the bottom end of the range, we would consider looking to the buy side whether that be short covering or establishing a long position. We feel this market will continue to be mostly range bound until we get a new fundamental catalyst for a bigger directional move.
Resistance:72.80**, 74.00-74.375**, 76.225-76.40**
Support: 70.625-71.15***, 67.75-68.00****
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