Cattle futures have been able to defend support over the last week, but the upside may be limited too. This could setup for a choppy trade conducive to short term trade setups.
Live Cattle
Live cattle futures were able to defend support yet again, keeping it intact from 184.55-185.20. A retest of the lower end of that range would raise some caution flags as a retest for the fifth time would increase the likelihood of a breakdown. The next downside objective below that would come in from 182.82-183.325. On the resistance side, 187.67-188.00 is the objective if the market can get out above yesterday’s high, 186.60. We are in the camp that we see a choppy and consolidated trade which would be advantageous for shorter term traders who are not married to a longer-term directional bias. We do have a Federal Reserve meeting later this afternoon, perhaps that keeps things interesting into the end of the week.
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 weaker on Wednesday afternoon with choice cuts 1.62 lower to 315.59 and select cuts 2.04 lower to 283.20. 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 but in line with the prior day’s report. Wednesday’s slaughter was reported at 125k head, right in line with the same day last year and only 1k less than last week.
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)
Lean hogs opened lower but quickly found their footing yesterday morning as prices attempted to erase losses from the previous day’s trade. Our pivot pocket comes in from 83.97-84.30. A failure here likely spurs long liquidation from Funds who have been aggressive buyers for weeks on end. The next downside target would be 82.05-82.27 with more significant support near 81.
Resistance: 86.225***
Pivot: 83.97-84.30
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.
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).
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