It’s a risk-on trade in the stock market while commodities come under fire from a surging US Dollar. What’s in store for the livestock markets?
Live Cattle (December)
December live cattle futures traded within the previous day’s range for the second straight session. With an inside trading day, the support pocket that we are watching like a hawk remains intact, that comes in from 184.55-185.20. We continue to believe this pocket can hold, a break and close below that pocket would likely flip that bias with the next downside objective coming in from 182.82-183.32. Coming into the early morning trade we see a risk-on trade in the equity markets but a rotation out of commodities as the US Dollar rips higher.
Resistance: 189.47-190.075***, 191.47-191.62****
Pivot: 187.675-188.00
Support: 184.55-185.20***, 182.82-183.325****
Daily Cattle and Beef Summary
Cutout values were mixed on Tuesday afternoon with choice cuts .30 higher to 317.21 and select cuts 1.92 lower to 285.24. The 5-area average price for live steers was reported at 187.71 with light trade, that is softer than what we saw to start the week. Tuesday’s slaughter was reported at 124k head, unchanged from the previous week and 1k less than the same day last year.
Seasonal Tendency Update
Below is a look at historical price averages for February futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results). The chart appears to show that the first half of November is a tough time for the market to stage a meaningful rally. Whether or not that rings true this year is TBD. As mentioned for the last week, volatility is still relatively low which may make options an appealing tool to help manage risk or express an opinion in the market with limited risk.
Commitment of Traders Update
Friday’s Commitment of Traders report showed funds were net buyers of about 7.7k futures and options contracts, expanding their net long position to 100,516 contracts. That registers as the largest net long position since September of 2023.
Lean Hogs (February)
February lean hog futures got hit yesterday, but not to the extent the December futures did. The market settled right in our pivot pocket from 84.30-84.65, that will be watched closely through today’s trade. A failure to hold here and against yesterday’s low could open the door for long liquidation down to 82.05-82.27.
Resistance: 86.225**
Pivot: 84.30-84.65
Support: 82.05-82.27***, 80.90-81.20****
Commitment of Traders
Friday’s Commitment of Traders report showed funds were net buyers of about 14.5k contracts, nearly all of that coming from new longs. That expands the net long position to 107,169, a new record. Broken down that is 119,028 longs VS 11,859 shorts.
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