Feeder and live cattle were on fire yesterday, trading 2.17 ½ higher in April live cattle and nearly 5.00 higher in March feeders. The cattle markets weren’t able to keep the momentum going today, closing 0.27 ½ lower in April live cattle and 0.30 lower in feeders. The cash markets have continued to be very strong recently, with trades at 249 compared to last week’s average at 246.70. April Live cattle are only 8 bucks off the all-time high, and its only February. February and March tends to be seasonal low, but that’s not the case this year. Prices overriding the seasonal bearish trend is very bullish. I’m expecting higher prices at least through June. Heifer retention may have started, but it’s not yet meaningful as it’s still regional. There’s still a gap in the chart above in March feeders at 370.60 to 376.70. April fat cattle also have a gap in the chart at 246.25 to 250.25.
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I believe that at some point soon the gaps in these charts will get filled and take prices to new contracts highs. Last Friday’s COT showed managed money lightening their net long position in feeders and fats. At some point, some bigger money will likely rotate into cattle and takes the markets higher because prices are too cheap right now. Feeders are trading above short-term moving averages, including the 8 and 13-day, and above the 50-day moving average. And open interest is increasing as prices have been creeping higher. There’s only so much that can be done from a packer perspective to keep a handle on this market. Cattle slaughter is down 11% from a year ago, and there’s already been a series of plant closures and shift reductions. The USDA will release its February Cattle on Feed report on Friday.
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Pre-report estimates:
On Feed: 98.4% of last year
Placements: 96%
Marketings: 87%
MARCH’26 FEEDER CATTLE 370.97 ½
BUY 1 MARCH’26 380 CALL 3.00
SELL 1 MARCH’26 400 CALL 0.42 ½
PRICE: 2.57 ½
COST: $1,287.50/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
MARCH’26 FEEDER CATTLE OPTIONS EXPIRE 3/26/26 (36 DAYS)
MAXIMUM LOSS: LIMITED
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APRIL’26 FEEDER CATTLE 367.82 ½
BUY 1 APRIL’26 380 CALL 5.02 ½
SELL 1 APRIL’26 400 CALL 1.25
PRICE: 3.77 ½
COST: $1,887.50/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
APRIL’26 FEEDER CATTLE OPTIONS EXPIRE 4/30/26 (71 DAYS)
MAXIMUM LOSS: LIMITED
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MAY’26 FEEDER CATTLE 363.80
BUY 1 MAY’26 380 CALL 5.12 ½
SELL 1 MAY’26 400 CALL 1.50
PRICE: 3.62 ½
COST: $1,812.50/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
MAY’26 FEEDER CATTLE OPTIONS EXPIRE 5/21/26 (92 DAYS)
MAXIMUM LOSS: LIMITED
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SEPTEMBER’26 FEEDER CATTLE 361.60
SELL 1 SEPTEMBER’26 330 PUT 7.70
BUY 1 SEPTEMBER’26 300 PUT 3.35
PRICE: 4.35 CREDIT
COST: $2,175.00 CREDIT/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
SEPTEMBER’26 FEEDER CATTLE OPTIONS EXPIRE 9/24/26 (218 DAYS)
MAXIMUM LOSS: LIMITED
SELL 1 SEPTEMBER’26 320 PUT 5.85
BUY 1 SEPTEMBER’26 300 PUT 3.35
PRICE: 2.50 CREDIT
COST: $1,250.00 CREDIT/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
SEPTEMBER’26 FEEDER CATTLE OPTIONS EXPIRE 9/24/26 (218 DAYS)
MAXIMUM LOSS: LIMITED
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OCTOBER’26 FEEDER CATTLE 358.87 ½
SELL 1 OCTOBER’26 330 PUT 9.00
BUY 1 OCTOBER’26 300 PUT 4.02 ½
PRICE: 4.97 ½ CREDIT
COST: $2,487.50 CREDIT/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
OCTOBER’26 FEEDER CATTLE OPTIONS EXPIRE 10/29/26 (253 DAYS)
MAXIMUM LOSS: LIMITED
SELL 1 OCTOBER’26 320 PUT 6.87 ½
BUY 1 OCTOBER’26 300 PUT 4.02 ½
PRICE: 2.85 CREDIT
COST: $1,425.00 CREDIT/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
OCTOBER’26 FEEDER CATTLE OPTIONS EXPIRE 10/29/26 (253 DAYS)
MAXIMUM LOSS: LIMITED
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Hans Schmit
Broker, Pure Hedge Division
312-765-7311
hschmit@walshtrading.com
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