Positive Technical Week for Futures

By Cassie Fish, http://cassandrafish.com

CME live cattle futures have posted a big outside week with a higher close, breaking out of the trading range it had been confined in since early May. Despite being overbought, futures pushed to new highs and open interest increased notably the last two trading days.

It is stating the obvious that futures are looking past the immediate fundamentals. Short hedgers are losing money on the cattle that are being harvested, $200 to $400 per head while the basis sling shot move is putting some hedgers in the red on their futures position.

The futures rally has enhanced the optimism of those buying replacement cattle and cash feeder cattle prices have hit the highest level since February.

Today’s futures action has been quiet following two very active days, with Aug LC backing off and staying red, the bear spreads reasserting after a couple of days. But all in all the chart picture is positive and its likely fund buying has increased enticed by the technical action.

Cash trade has continued at $97 late yesterday in western Nebraska and $160 in northwest Iowa this morning. The weekly negotiated trade total is 84k head, not tiny but the first sub-100k head trade volume in 3 weeks.

This week’s slaughter is estimated at 650k to 655k head. Yesterday’s actual slaughter for week ended July 4th was reported and the actual kill fell short of the estimate by 12k head- something that has become commonplace since post-Covid production has resumed.

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