Livestock Futures Commentary
Live Cattle (April)
Breaking: Chinese officials said they will reduce tariffs on $75 billion worth of US goods, a positive development in implementing Phase-1. These adjustments will go into effect on February 14th.
April live cattle failed to find their footing, cutting against our thesis that the outside markets stabilizing would offer more support to the market. Prices are now back down to our technical support pocket from 118.975-119.10. The bulls MUST defend this on a closing basis, a failure to do so could trigger another leg lower, the next line in the sand coming in at 116.70. On the resistance side of things, the bulls want to see consecutive closes above our pivot pocket from 121.225-121.80. If they can achieve this then we could see an extension to fill the gap from January 24th. At that point, we would like to get more aggressive on the short side. Yesterday’s Fed Cattle Exchange didn’t sell any cattle, but cash is expected to be steady to softer this week. Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed to you each day.
Feeder Cattle (March)
March feeder cattle broke back lower yesterday, falling short of filling the gap from 138.80-139.25. This pocket also contains the 200-day moving average, a key retracement, and several other previously important price points over the last several months. We were hoping to be able to resell this pocket but may have to get more aggressive. If the bulls cannot find their footing in the final two days of the week, we could see the market make new lows for the move. Our support pocket remains intact from 133.25-134.20.
Lean Hogs (April)
April lean hogs continued to work back lower yesterday, not a good technical development for the bull-camp. The recent volatility created an irrational and emotional trade, making indicators/levels all but meaningless. The one silver lining over the last two days is that the consolidation has started to re-calibrate some of the shorter term technicals. First resistance is obvious, that comes in from 65.15-65.825, the gap from January 31st. Support is more difficult being near uncharted territory, but we see 61.00-61.775 as the obvious pocket. This pocket represents the lows from the last three sessions. The RSI (relative strength index) is at 23.77.