Once again it was attributed to the money game of a large professional trying to support February. The sell pressure in general was attributed to some weaker than expected cash trade, some less intense weather forecasts for the long-range outlook, and the weak feeder futures due to sharply higher corn futures of course.

The weather bulls don't seem to have as strong an argument today as the Weekly Livestock Slaughter report showed live weights 4 pounds heavier than the previous week. This was for the week ending December 30, meaning these cattle were marketed after at least one snowstorm and some amid the second. Steer and heifer weights on a dressed basis are almost 20 pounds heavier than last year, not exactly a bullish set of numbers amid high corn prices and wintry weather. Perhaps the lower weights will show up in next week's report, but so far the evidence is favoring the bears.

Cattle slaughter today at 123,000 head was large relative to levels seen previously this week. Beef prices continue to move higher, which is somewhat encouraging to packers. To do this, packers must have access to good numbers of contract cattle or envision being able to acquire cattle. Whether that is at a higher or lower price will be of interest to traders tomorrow.

The fundamental bears may even concede higher prices, declaring that is the top. Technical bears will be touting April's potential head-and-shoulder top on the hourly chart, looking for a breach of support at the potential neckline defined at about 93.80 for tomorrow. Today's low was 93.75, so sell stops would seem likely to reside below that. On the upside, the formation is negated by taking out the recent highs. The downtrend line drawn off the highs on the hourly chart suggest a breakout on a move above 94.70. Today's high was 94.80, so buy stops would seem likely to reside above that.

Feeder cattle futures were lower on the close. Feeders bounced, but not much relative to live cattle, actually finishing on its last hour lows. The late rally tried to fill the opening gap, but failed to do so. This seems to send a bearish signal, but tomorrow's USDA reports and what they say about the corn outlook will have more to do with where feeder futures go from here. If corn finds additional strength and feedlots continue to resist buying feeder cattle because of sloppy yards, then it would seem likely that feeder cattle futures could go back down to test the 95.00 area. There is a gap at 95.20-95.30 that may offer some support, plus an uptrend line draw off the last two swing lows offers support at 95.36.

Source: Inside Futures