The Cattle Range Home Page
December 1, 2017
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Fed Cattle Market...
Cash Market Trades Higher; Futures Top

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Cash Market Trades Higher; Futures Top
Cassie Fish -- cassandrafish.com

As is the way of commodity market movement in the modern day, CME cattle futures have turned south with a vengeance and great velocity.

Fading the good cash cattle news this week with aplomb, most active Feb LC is a technical wreck of significance. Thanks to the gift of hindsight, it’s clear the Q4 tops occurred the end of October for cash cattle, the week ended November 10 for boxes and the same week for futures. This week’s futures rally was merely a technical correction for oversold futures contracts fueled in part by a ‘last cash cattle rally for the year’.

Taking out the last swing low made last week bodes ill for the market technically as futures, well under the 40-day moving average, barrel towards the 100-day moving average. Most active Feb, posting a massive weekly reversal today, has been above the 100-day since September and a close below it in December would signal long liquidation which could drive the market still lower. Today, the 100-day is at $119.32. No longer oversold, thanks to an almost 6-day rally, the market has room to extend the break.

No doubt the cash market is still somewhat between cattle and big fed kills have kept front-end supplies current (this week’s kill estimated at 638k). Additionally, there are pockets in the country that are still tight, but slaughter needs the remainder of December will lessen as the calendar moves past peak holiday demand and towards the actual holidays themselves.

Packer margins have tightened, and kills will start to decline beginning next week with plenty of mentions of cuts floating around the industry. Cash cattle prices will likely trend lower going forward through year’s end. Boxes typically see the rib and tenderloin break hard after next week and the end cuts gain some in value. Overall though, it will be January before the cutout experiences a solid uptrend.

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