Cash sales disappointed last week, with cattle trading steady at 124.00 on a live basis and dressed at 197.00. It led to a breakdown in futures with the April Live Cattle trading down to support at 125.80, making the low at 125.65. It settled above support at 126.075. A break down below the low could lead to a test of support at 124.30. A break out above the 126.975 high could see price revisit the 127.80 high. Cutouts remain strong with choice up 1.08 to 216.34 and select up 0.86 to 211.72 on 94 loads. Demand was fairly good and offerings were light. The choice/ select spread widened to 4.62. Hedgers could buy the April 123.00 put and sell the April 130.00 call for .30 plus fees (puts over). March Feeder Cattle continued its descent as it made a new low for the move at 141.20. Support is just below at 140.775. A break down below support puts the 138.95 support level in play. Resistance is at 142.40. Continued wintry weather has led to muddy pens and a reluctance of feedlots to make purchases. The Feeder Cattle Index reflects this and as of January 21st is at 141.62, down from 145.55 on January 9th.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Friday, January 25th at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
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Senior Market Strategist
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.