Livestock Futures Commentary
Live Cattle (December)
December live cattle managed to work into our resistance pocket today, we have defined that as 111.175-111.50, this pocket represents previously important price points, including the gap from August 9th. The market has closed higher for four consecutive sessions, the first time since July. The market has not had five consecutive higher closes since we peaked in April. The RSI (relative strength index) is at the most overbought levels since April too. That’s not to say we think the top is in but believe a pullback would be healthy for the market. 109.00-109.50 is the first support pocket this week, this represents support last week as well as the 100-day moving average. Cash cattle firmed last week with the majority of sales coming in from 107-109. Friday’s Commitment of Traders report showed funds bought back 11,704 contracts, putting them back in the black, net long 5,887 contracts.
Feeder Cattle (November)
November feeder cattle marked their third consecutive lower close as the market continues to feel heavy against significant resistance from 143.50-144.15. This has been resistance going back to July. If the bulls can achieve consecutive closes above here it could spark another run, but we wouldn’t be surprised to see prices retreat first. First support this week comes in from 139.575-140.00. A break and close below here could open the door for a run at the gap from September 20th at 137.325. Friday’s Commitment of Traders report showed funds bought back 867 contracts, trimming their net short position to 3,263 contracts.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 211.09 / 185.91
Change from prior day: / (.87) / (1.01)
Choice/Select spread: / 25.18
Lean Hogs (December)
December lean hogs finished today’s trade limit down, giving us the gift of expanded limits for tomorrow's session. Today was the fifth consecutive lower close, the longest losing streak since the waterfall selloff at the end of July. The RSI (relative strength index) is at 43, a relatively flat rating. First “support” comes in at 64.20, this represents the lock limit session on September 12th. The next and more significant support pocket comes in from 61.525-61.75. There was a headline today that read: “The Chinese Commerce Ministry says what is not in the table and never will be changes to their laws to protect intellectual property. The Commerce Ministry telling us that the Chinese will deal with intellectual property theft through administrative regulations.” This is a kick in the knee for meaningful progress in negotiations. We continue to believe there is an opportunity for futures to work higher but would like to be more aggressive at lower prices. Friday’s Commitment of Traders report showed funds sold 1,991 contracts last week, trimming their net long position to 19,645 contracts.
Resistance: 67.125-67.70**, 70.65-71.00***, 72.575-72.725****
Support: 64.20*, 61.525-61.75***, 57.775-58.75****