What’s moooving the Cattle market?
Live Cattle futures ended last week posting solid gains, with the October contract reaching highs not seen since March. Traders have become bullish on Live Cattle since the USDA lowered the amount of Cattle placed on feed in its most recent Cattle on Feed report. In addition, hopes that U.S. beef exports will improve, especially to Asia, later this year are helping to support fall and winter month contracts. However, with prices approaching the 100.00 mark, there are some concerns that futures prices may be ahead of themselves, with cash Cattle trading in the $91 to $91.50 area, and potential competition coming from cheaper pork and poultry prices. The most recent Commitment of Traders report shows large speculators net-long 34,437 contracts as of July 24th , and that sets the stage for some profit-taking selling as the month comes to an end.
Looking at the daily chart for October Cattle, we notice Friday’s high of 98.80 was just short of the contract high of 99.45 reached back in March. The 14-day RSI has reached overbought territory, with a reading of 73.58. Before Friday’s upside breakout, October Cattle had been trading in a very narrow 2.00 range for most of the month of July, and the low end of this range at 96.20 looks to be solid support. Contract highs at 99.45 should act as resistance, with 100.00 a potential target, should resistance fail to hold. October Live Cattle closed on Friday at 98.65, up 1.45.
