Cattle Futures Test Technical Support

This morning’s economic data was a bit of a goldilocks number. The initial reaction for interest rates was lower on the back of this report which helped support risk assets.

Live Cattle

It was a risk off trade to round out the month which may have added pressure to the cattle complex. Despite being weaker for much of the session, the last 30 minutes of trade were constructive as the market fought hard to defend the lows from the previous day’s trade. We’ve been cautious on cattle against the May/June/July highs (189.47-190.075), but the pullback has brought us closer to what we see as a value zone. So long as the outside markets don’t see a prolonged risk-off trade, we see pretty good support in the cattle market from 184.55-185.20. There are a handful of headline risks that could prompt that, so be sure to manage risk appropriately.

Resistance: 189.47-190.075, 191.47-191.62
Pivot: 187.675-188.00
Support: 184.55-185.20, 182.82-183.325

Daily Cattle and Beef Summary

Cutout values were softer on Thursday afternoon with choice cuts 1.84 lower to 317.60 and select cuts -3.95 lower to 285.37. The 5-area average price for live steers was reported at 189.79, mostly steady for the week. Thursday’s slaughter was reported at 121 k head, 3k less than last Thursday and 5k less than the same day last year. Week to date slaughter stands at 490k, that compares with 491k last week and 500k last year.

Seasonal Tendency Update
Below is a look at historical price averages for February futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results). The chart appears to show that the first half of November is a tough time for the market to stage a meaningful rally. Whether or not that rings true this year is TBD. As mentioned for the last week, volatility is still relatively low which may make options an appealing tool to help manage risk or express an opinion in the market with limited risk.

Feeder Cattle

January feeder cattle got hit hard again in yesterday’s trade, trading down to and defending our first support pocket from 239.62-240.15. The ability to defend that pocket led to a pretty impressive last half hour of trade. If the Bulls can use yesterday’s close as a source of strength, we could see a retest of our pivot pocket from 242.75-243.77.

Resistance: 246.82-247.60, 249.85-250.80*
Pivot: 242.75-243.77
Support: 239.62-240.15, 237.50-237.95*

Seasonal Tendency Update
Below is a look at historical price averages for January futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results). Looking at this chart, it looks like November can be a pretty choppy and indecisive month for price trends.

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