Live Cattle
Technicals (October – V)
October live cattle managed to stage an impressive rally on Friday, with prices rallying and settling just a tick off the upper end of our first resistance pocket at 181.175. This will now act as our pivot pocket to start this week’s trade. If the Bulls can find follow-through buying early on in today’s trade, the next upside objective we see comes in from 182.675-183.275. Consecutive closes above this pocket could neutralize our “sell rallies” bias.
Resistance: 182.675-183.275* Pivot: 180.575-181.175 Support: 179.35-180.50**, 176.35-176.22
Daily Livestock Summary
Friday afternoon’s cutout values firmed with choice cuts .59 higher to 312.71 and select cuts up .56 to 298.59. The 5-area average price for live steers was reported at 191.43, which is still at the upper end of this year’s range. Daily slaughter was reported at 104k head, 12k head less than the previous week. Weekly slaughter was reported at 588k.
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.
Commitment of Traders Update
Friday’s Commitment of Traders report showed Managed Money, aka Funds, were net sellers of about 21k futures and options contracts, with 20k of that coming from long liquidation. That drops their net long position to 58,348 contracts, the smallest net long position in about two months.
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