Cattle futures were weaker early on in yesterday’s trade but were able to find their footing and rally back near technical resistance.
Oliver Sloup on CME Group discusses April Live Cattle settle $1.32 higher
Live Cattle
Technicals (April- J)
April live cattle futures were able to gain back some ground in Tuesday’s trade, settling the day 1.32 higher to 188.00. That puts prices right on the upper bounds of our pivot pocket. The market feels like it’s building up energy for a bigger directional move as the wedge continues to narrow. If the Bulls can chew through and close above our pivot pocket, we could see additional momentum come into the market and take prices towards our next resistance pocket and the gap from October 23rd, 189.10-190.275.
Yesterday’s boxed beef was weaker with choice cuts down 1.51 to 304.79 and select cuts down .30 to 294.87. The 5-area average price for live steers was at 178, but only on 115 head. Daily slaughter was reported at 122k head, 3k less than the previous week and about 4k less than the same day last year.
Resistance: 189.10-190.275***
Pivot: 187.30-188.05
Support: 186.45-186.32*, 182.60-183.45
Seasonal Tendencies
Below is a look at historical seasonality’s (updated each Monday) VS today’s prices (black line). Seasonally we start to see April futures top out, but if you’ve been watching cattle at all over the last year you know that seasonals tendencies tend to have had a lower correlation this year.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed Funds were net buyers of about 8k futures and options contracts, extending their net long position for the sixth consecutive week, now sitting roughly 55k contracts long. Typically, we would view this as a relatively Neutral/Bullish position. This is about half of the length they had when prices peaked last Fall.
Feeder Cattle
Technicals (April- J)
April feeder cattle gained back some ground on Tuesday, settling the day 1.42 higher to 257.17. As with live cattle, feeder cattle appear to be approaching a near term inflection point as well. If the Bulls can keep the momentum going, a move towards 260.65-260.80 would be the next upward objective. Above that and we’d be looking at a move into the mid 260s. Now with that said, grains are in the dump and seem like the might be for a while, but there is risk of a short covering rally there which could put a headwind in the market. Nobody know when that would happen, but you should be aware of the corn market in this environment.
Resistance: 260.65-260.80***
Pivot: 255.60
Support: 253.85-254.25*, 251.97
Seasonal Tendencies
Below is a look at historical seasonality’s (updated each Monday) VS today’s prices (black line). Historically, this isn’t the best time to get supper bulled up on Feeder Cattle, but time will tell.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Funds expanded their net long position in feeder cattle to 9,991 futures and options contracts. This was the ninth straight week of Funds adding to net longs which puts them at their largest net long position since the end of September.
Lean Hogs
Technicals (April- J)
April lean hogs were under pressure in Monday’s trade which bled into Tuesday. Prices retreated back towards trendline resistance and our support pocket which starts at 84.40. So far that has held and if the Bulls are able to defend it early in Wednesday’s trade it could setup for a decent risk/reward trade back to the buyside. However, a break and close below and there is some air in the chart with little support until you get into 82.67-82.80.
Resistance: 89.00-89.05**
Pivot: 85.50-86.05
Support: 83.60-84.40, 82.67-82.80
Seasonal Tendencies
Below is a look at historical seasonality’s (updated each Monday) VS today’s prices (black line).
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed funds expanded their net long position to 63,064 futures and options contracts, up roughly 15k from the previous week. This was the eight straight week that Funds were net buyers.
