Livestock Futures Commentary
Live Cattle (April)
April live cattle started this week’s trade a little wobbly but firmed up into the afternoon session. Prices traded as low as 119.10, just a stones throw away from our 4-star support at 118.975. We have been suggesting this level, up to 120.375 as buying opportunities; whether that be bearish traders covering shorts or bullish traders initiating longs. We still have a bearish bias but would love to see a relief rally take us near 123.075-123.45, an area where we would look to sell against. This pocket represents the gap from January 24th, along with the 100-day moving average and other previously important price points. Friday’s Commitment of Traders report showed funds sold 19,176 contracts, trimming their net long position to 71,078. Outside markets have stabilized today, if that continues through the week that could also help stabilize future concerns over demand.
Resistance: 123.075-123.45***, 124.025-124.30****, 127.90-128.55***
Support: 118.975-119.10****, 116.70****
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Feeder Cattle (March)
March feeder cattle spent the early morning trade under pressure but held ground in our 4-star support pocket 133.25-134.20. This pocket represents a key retracement, derived from the contract lows in September to the recent triple top highs. This pocket also contains the gap, left from September 20th. In last week’s report we wrote, “If you have been short or want to be long, this is the spot to consider buying.”. The market finished in our pivot pocket, an area we have had listed as 136.725-137.25, but the reversal bodes well for a further relief rally, the next objective being 138.80-139.25. This pocket represents the gap from January 24th, a key retracement, and the 200-day moving average.
Lean Hogs (April)
Lean hogs were mixed to start the day with headlines suggesting China was seeking leniency on the Phase-1 agreement due to the coronavirus outbreak, halting an attempt at a meaningful relief rally in the front months. Technical support and resistance levels are out the window near term as volatility and emotion has taken control of the market. We think there is value in hogs after such a steep discount but are working with clients to take smaller position sizes in this type of environment.