Cattle Futures Post New Contract Highs
The cattle rally continued on Wednesday, with live cattle contracts posting new contract highs and feeder cattle futures within arm’s reach. How much more upside is left?
USDA weighs reopening Mexico border
Rollins said the agency is closely monitoring the spread of New World screwworm and is weighing a phased reopening of the southern border to Mexican feeder cattle.
One U.S.-Mexico commercial port of entry that USDA is looking at potentially reopening is in Douglas, Arizona, which is about 800 miles from the closest known screwworm case, Rollins said, according to the recording.
“We’re currently evaluating a potential phased-in strategy,” Rollins said.
“We obviously will not be opening all four ports any time soon. But there is a realistic conversation that is happening, that is looking at that port that is about 800 miles from the closest case,” she said.
Rollins said she expects an announcement on the matter, either way, within the next two to four weeks.
In a statement to Reuters, a USDA spokesperson said the agency will resume livestock imports “at such a time when we determine the risk of NWS introduction into the U.S. can be adequately mitigated.”
USDA said that it is evaluating a combination of factors, “including our science-based import protocol, the animal health status of individual Mexican states, and the degree to which Mexico’s national agriculture authority has made progress in implementing our recommendations.”
Live Cattle (June)
June live cattle futures posted a new contract high yesterday, which brings the RSI within reach of “overbought” territory, with a reading currently at 69.30. Equity markets were on a tear the last two days as ideas of a wind-down in the Middle East offered relief to outside markets. Following last night’s Presidential address, equities are sharply lower and oil sharply higher, ahead of a long weekend of uncertainty. Cattle have been able to buck the trend of weakness in the outside markets over the last week, but if this trade holds and continues through the morning, this may be too much to overcome in today’s trade.
Resistance: 244.47-245.00**, 248.30**
Pivot: 242.82
Support: 239.57-240.52***, 235.50-236.47**, 233.00-233.50***
Fund Positioning
Friday’s Commitment of Traders report showed funds were net sellers of 4,919 Futures contracts, shrinking their net long position to 112,044 (still historically large).
Seasonal Tendencies
Below is an updated look at historical price averages over different time frames, 5, 10 ,15, 20, and 30 years. Historically, we are entering a weaker time of year for prices, whether or not that plays out again this year or not is TBD. Seasonal studies are just another tool in the toolbox, but if you have physical risk, it may be enough of a reason to consider protecting price from these levels.
