Cattle futures were strong early on in Thursday’s trade but reversed to finish the day sharply lower. Is the seasonal high in?
Live Cattle
Technicals (April- J)
Welcome to the futures market, where one day you feel like an idiot and the next day you feel smart again, rinse and repeat. Our optimism for cattle to fill and potentially breakout above the gap had been waning all week which morphed into bearishness following Tuesday’s trade, only for the market to close at new highs for the move, on Wednesday. Yesterday was a different story; April live cattle futures filled the October gap to a T and reversed sharply to finish about 3.50 off the high and are now threatening a break below trendline support from the December lows and the 20day moving average. A failure to defend our support pocket from 186.30-186.90 could spark another wave of selling pressure with the 50-day moving average being the next downside target, near 184.15.
Yesterday’s afternoon cutout report was firm with choice 96 cents higher to 310.78 and select cuts 65 cents higher to 301.69. The 5-area average was reported at184.85 which was steady with the previous day, but there wasn’t a lot traded. Daily slaughter came in at 122k head, down about 2k from the same day last year.
Resistance: 189.10-190.275***
Pivot: 187.30-188.05
Support: 186.30-186.90*, 183.45-184.15
Seasonal Tendencies (June Live Cattle)
Below is a look at historical seasonality’s (updated each Monday) VS today’s prices (black line). Seasonally we start to see June futures soften up, 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 seventh consecutive week, now sitting roughly 59.3k 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 traded higher out of the gate yesterday morning but reversed to finish the day sharply lower, closing below first support, which keeps the door open for a move towards our 4-star support pocket from 248.00-249.00. We’ve been leaning on feeders with a bearish bias but didn’t see it coming on a day with corn down nearly 8 cents. If you’re bullish, you want to see a close back above 252.60-253.85. That’s a wide range, but that’s what we get when ranges expand.
Resistance: 253.85-254.25, 260.65-260.80
Pivot: 252.60 253.85
Support: 248.00-249.00****
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 11,527 futures and options contracts. This was the tenth straight week of Funds adding to net longs which puts them at their largest net long position since the end of September, which topped out at nearly 20k contracts
Lean Hogs
Technicals (April- J)
April lean hogs are trading in relatively wide ranges this week but for the most part have been consolidating, which keeps support and resistance levels intact for today’s trade. As you can see from the chart below, support and resistance are continuing to converge which could set up for a bigger directional move from a technical perspective. Longer term trend has been higher lows and higher highs, while Bears have the advantage on a shorter time frame. We are pretty neutral here.
Resistance: 89.00-89.05**
Pivot: 85.50-86.05
Support: 82.40-82.80****
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 65,090 futures and options contracts, up roughly 1k from the previous week. This was the ninth straight week that Funds were net buyers.
