Cattle futures have had a nasty selloff over the last several weeks, is the market oversold?
Live Cattle
Technicals (October – V)
October live cattle made new lows for the move, closing below 3-star support from 176.35-177.22 (this will now act as our pivot pocket), which opens the door for a potential retest of the April lows at 170.82. Despite the sharp selloff the RSI is still above oversold territory, thanks to some recent consolidation.
- Resistance: 179.35-180.50**, 182.675-183.275****
- Pivot: 176.35-177.22
- Support: 173.87**, 170.82**
Daily Cattle Summary
- Yesterday afternoon’s cutout values on the softer side with choice cuts down .47 to 315.08 and select cuts down .97 to 301.04. Daily slaughter was reported at 124k head.
Below: Daily chart of October live cattle which illustrates the recent recovery back near the middle of the recent range.
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 made new lows, officially marking a full retracement with a revisit to the December lows. Where do we go from here is the big question. We’ve had a bearish tilt for several weeks now, but downside objectives are being hit and the short-term risk may be shifting back to the upside. A close back above 236.57-237.00 could start to encourage additional relief and repair some of the technical damage that has been done.
- Resistance: 238.97-239.15***,242.15-242.22
- Pivot: 236.57-237.00
- Support: 232.75-233.95****
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.
Lean Hogs
Technicals (October – V)
October lean hogs are continuing to consolidate near trendline resistance. If the market can get out above Monday’s high of 77.27 we could see that spark some more upward momentum towards more meaningful resistance from 78.55-78.70, above that opens the door for 81.80-82.00. On the flipside, a break back below 73.90-74.45 puts the Bears back in the driver’s seat.
- Resistance: 78.55-78.70***, 81.80-82.00****
- Pivot: 73.90-74.45
- Support: 72.42-72.475***, 68.05-68.10****
Below is the daily chart for October lean hogs. The market has been consolidating between trendline resistance and a previously important inflection point near 74.
Chart of Interest
Below is a look at price averages for October lean hogs over the last 5, 10, 15, 20, and 30 years. The chart below illustrates some seasonal weakness into the middle of August, but then that turns more friendly through the remainder of the contract’s life. Important to remember that past performance is not necessarily indicative of future results.
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