Livestock Futures Get Hit Hard in Thursday’s Trade. Where’s the Bottom?

Live Cattle

Technicals (October – V) October live cattle futures failed to participate in a broad based outside market rally yesterday, which was certainly a disappointment for those looking for a bigger recovery rally. With that said, the market remains trapped within Monday’s range which does little to change the technical landscape as we enter the last trading day of the week. We are in the camp that we can see some relief from these levels but would likely view those as selling opportunities, particularly for those that need to hedge or protect downside risk.

• Resistance: 180.575-181.175, 182.675-183.275*
• Pivot: 179.35-180.50
• Support: 176.35-176.22***

Daily Livestock Summary

Yesterday’s cutout values were softer with choice cuts down 1.73 to 312.12 and select cuts down .80 to 298.03. The 5-area average price for live steers was reported at 192.51. Daily slaughter came in at 121k head, in line with last week and last year. Week to date slaughter stands at 484k head.

Below: Daily chart of October live cattle which illustrates the accelerated selling pressure following the breakdown of trendline support. Also included is a set of Fibonacci retracements from the high to low of the recent move.

Chart of Interest

There’s been a lot of comparisons in the grain markets this year VS 2014, so just for fun, we thought we’d take look at a year of interest for a cattle comparison, that being December 2015, which aligns with the old contract highs that were set in late 2014. Below is a look at this year’s December live cattle contract (black line) VS the December 2015 contract in the green line.

Feeder Cattle

Technicals (August – Q) August feeder cattle couldn’t get much going in yesterday’s trade, but it did fare significantly better than the back months which all posted new lows for the week and some marking new contract lows. Boy how things can change in just a week. The CME CVOL index (a measure of volatility) for feeder cattle didn’t do much yesterday but remains near the highest levels since Spring. As with live cattle, we would think there would be some opportunity for relief from these levels with the RSI reaching the most oversold levels since last Fall’s selloff.

• Resistance: 245.925-246.675, 249.15-250.92*
• Pivot: 244.275
• Support:240.775-240.925, 237.80-237.97* 229.50*

Below: Daily chart of August feeder cattle that illustrates the accelerated selling pressure that took place following a break below trendline support. Also included is a set of Fibonacci retracements from this year’s trading range.
 

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