Cattle Prices Likely Just Topped Out. Look Out Below!

October live cattle (LEV26) futures present a selling opportunity on more price weakness.

See on the daily bar chart for October live cattle futures that price action on Monday negated a price uptrend, which is one clue that a near-term market top is in place. The bulls did not have the strength to extend the recent rally as prices neared very strong overhead technical resistance levels at the recent highs.

Fundamentally, beef prices at the meat counter remain historically elevated. We are in the peak driving and vacation season with gasoline prices at the pump still significantly above last year’s levels. Consumers will likely be looking to more economical proteins such as pork and poultry. And the bacon-lettuce-tomato (BLT) season is now on the door step. All of the above suggest a dip in consumer demand for beef could occur in the next few months.

A move in October live cattle futures below chart support at Monday’s low of $236.00 would give the bears more strength and it would also then become a selling opportunity. The downside price objective would be $210.00, or below. Technical resistance, for which to place a protective buy stop just above, is located at the contract high of $246.55.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.