Cattle futures were able to firm in Tuesday’s trade as the market continues to repair some of the technical damage that was done in the prior two weeks. How much more upside is there?
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Live Cattle
Technicals (October – V)
Consolidation continues to be the theme as the CME CVOL index (measure of volatility) retreats from the recent highs. With the consolidation, not much has changed on the technical landscape as support and resistance levels remain intact from yesterday’s commentary, as well as our intermediate term bias which has a bearish tilt to it.
- Resistance: 181.175-181.50, 182.675-183.275*
- Pivot: 180.575-181.175
- Support: 179.35-180.50, 176.35-176.22
Daily Livestock Summary
Yesterday afternoon’s cutout values firmed again with choice cuts 1.10 higher to 316.93 and select cuts up .44 to 300.61. Daily slaughter was reported at 122k head, 4k head less than the same day last year.
Below: Daily chart of October live cattle which illustrates the accelerated selling pressure following the breakdown of trendline support. Also included is a set of Fibonacci retracements from the high to low of the recent move.
Seasonal Tendencies
Below is a look at prices averages for October live cattle over the last 5, 10, 15, 20, and 30 years. As referenced many times last month, August can be a tricky year to stage a meaningful rally. Those headwinds start to subside some when we turn the calendar over to September. *Past performance is not necessarily indicative of future results.
Feeder Cattle
Technicals (September- U)
September feeder cattle futures were able to rally to close at their highest level in nearly two weeks. With that said, it wasn’t enough to alter the technical levels we have an eye on. Significant resistance comes in from 244.20-244.90, a breakout above there could spur an extension of the relief rally towards 248.77. We remain in the “sell rallies camp”, but with the potential of meaningful relief rallies it’s going to be important to manage position sizing.
- Resistance: 244.20-244.90, 248.675*, 252.50-253.55
- Pivot: 240
- Support: 236.57-236.75, 233.05-233.95*
Below: Daily chart of September feeder cattle that illustrates the accelerated selling pressure that took place following a break below trendline support. Also included is a set of Fibonacci retracements from this year’s trading range.
Seasonal Tendencies
Below is a look at prices averages for November feeder cattle over the last 5, 10, 15, 20, and 30 years. We are using November so you can see the longer trend as opposed to the front months which are on a much shorter time frame. As referenced many times last month, August can be a tricky year to stage a meaningful rally. Those headwinds start to subside some when we turn the calendar over to September, but that strength has often been short lived. *Past performance is not necessarily indicative of future results.
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