Cattle Continue Lower
Dec 05, 2017
Cattle Commentary: Cattle futures started out on the firm side if things but gave up gains and filled the gaps by midmorning. That quickly changed in the last hour of trade where we saw long liquidation lead to accelerated selling pressure across the board. We do know from Fridays Commitment of Traders report that funds hold a historically heavy long position for this time of year. Volatility often times invites more volatility leading to “irrational” price movement. February live cattle managed to gain back some of their losses but finished the day down .775, this after trading in a 3.05 range on the day. January feeder cattle finished 2.225 lower after trading in a range of 5.05 on the day. Cash trade has been non-existent for the most part this week. Tomorrows Fed Cattle Exchange has 653 head offered, this will be at 10am; last week there were 967 head with no sales. Last weeks cash trade was between 119-121.
PM Boxed Beef Choice Select
Current Cutout Values: 209.08 186.63
Change from prior day: .89 1.09
Choice/Select spread: 22.45
Live Cattle (February)
February live cattle closed lower for their fourth consecutive session, trading as much as 7.20 off of last Thursdays highs. In yesterdays report we noted 120.70 being the first level of support, this held on the first test but once broken ignited the whoosh lower to 119.575, a notch above our next support level of 119.36 which represents the 100-day moving average. That 120.70 will now become first resistance, if the market can make a push higher and close above here, we could see some near-term consolidation. The big move lower in a short amount of time does have the RSI (relative strength index) approaching oversold levels. We currently see the RSI at 36, for other markets a reading under 30 is a signal of exhaustion but cattle futures tend to be an exception; we are currently the third most oversold this February contract has ever been.
Resistance: 120.70***, 122.65-122.70***, 123.75**, 126.65-126.975****
Support: 119.36**, 118.05***, 116-116.50****
Feeder Cattle (January)
January feeder cattle broke down below technical support from 148.90-149.07 this represented the…