2-Minute Drill ⏱️ New Highs in Oct. Live Cattle?

• Despite renewed crop health concerns, the grain contracts were not able to maintain their overnight strength. After yesterday’s close, USDA published their weekly crop progress report. They slashed G/E ratings on corn 3% to just 53% G/E, and cut soybean G/E ratings by a whopping 5% also to 53% G/E. Both December Corn and November soybeans gapped higher overnight, and put their daily-highs in before this morning’s open. For the day, December corn settled ¼ cent lower at 485 ¾. November soybeans were fortunately able to sustain some of its gains, settling 11 ¼ cents higher at 1376 ¼. Meanwhile, December wheat continued its effort to hammer out a bottom, settling 9 ¾ cents higher at 609 even. 
• In the Livestock markets, October Live Cattle stole the show today, settling $2.75 cents higher to settle at 182.70, and we will be talking about this a little later on. October Feeder cattle followed suit, settling $2.175 higher, closing at 256.47 ½. October Lean Hogs were the lone loser on the session today, settling a buck 30 lower to close at 81.87 ½. 

October Live Cattle: 

• Are we breaking out to new highs in the October Feeder Cattle Contract?? 
• Significant bearish divergence from the previous 2 contract highs:
  • A new contract high was made despite the oscillator denoting price momentum failing to do so. What does this mean? It serves as an indication that bulls may be losing their advantage on the market, and that the new contract high was simply a result of price inertia and/or fund positioning. 
• Today’s price action seems to indicate the contrary.
  • This is not the normal year for live cattle futures – we’ve sustained near ATHs for nearly 2 fiscal quarters, and we broke above trendline resistance with today’s explosive move higher. 
  • If we’re bullish, maybe we should be looking for a continuation of strength tomorrow and the trendline could be used as a stop loss. 
• As mentioned, it’s been an atypical year for Live Cattle, but Labor Day Weekend historically typifies the funeral for beef demand. → seasonal chart. 

November Natural Gas: 

• Is it time to dip the toe in on the long side of natural gas futures? 
• Natural gas is affectionately referred to as the widow maker without reason – it’s an extremely volatile contract, and the chart doesn’t necessarily look pretty.
  • We gapped lower after the long holiday weekend, and continued to move lower today. 
• But, we’re nearing the time of year where a surprise coldspell could dramatically affect the contract.
  • Degradation of price through the calendar year this year was due to the demand destruction from the Nordstream pipeline being offline.