Live livestock

Technology (October – V)

Live October cattle managed to stage an impressive rally on Friday, with prices rising to sit just a tick off the top of our first pocket of resistance at 181,175. This will now act as our pivot pocket to start the week’s trade. If the Bulls can find follow-through buying early in today’s trade, the next upside target we see will come from 182.675-183.275. Consecutive closes above this pocket could neutralize our “sell rally” 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 cut values ​​strengthened with picks dropping .59 higher to 312.71 and picks cutting up .56 to 298.59. The 5-area average price for live steers was reported at 191.43, which remains at the upper end of this year’s range. Daily slaughter was reported at 104,000 head, down 12,000 head from the previous week. Weekly slaughter was reported at 588k.

Below: Daily chart of October Live Cattle illustrating the accelerated selling pressure following the breakdown of the trendline support. Also included is a set of Fibonacci retracements from the high to the low of the last move.

Chart of interest
There have been many comparisons in the grain markets this year versus 2014, so just for fun we thought we’d look at a year of interest for a cattle comparison, namely December 2015, which is in line with the old contract highs set in late 2014 .Below is a look at this year’s live cattle contract in December (black line) compared to the December 2015 contract in the green line.

Merchant Commitment Update
Friday’s Commitment of Traders report showed that Managed Money, aka Funds, were net sellers of about 21,000 futures and options contracts, 20,000 of which came from long liquidations. That brings their net long position down to 58,348 contracts, the smallest net long position in about two months.

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