Well, let’s see what you think, but here are my thoughts on President Trump’s announcement this morning, Friday, August 21, allowing beef to come in tariff-free for 90 days, up to 300,000 pounds. Brazil could fill that in two months.
But I want to show you what’s happening in the cattle trade. This is the live cattle continuation chart, and a lot of bad news has been thrown at this market since the May high.
You can distinctly see five waves down. What’s interesting is how obvious Wave 3 is. Wave 3 came down and hit a trendline that has provided support for multiple years. From there, we saw a mild bounce of about 38%.
Now, we’re in what appears to be a fifth-wave drive lower. With this latest news story—and the Cattle on Feed report still coming this afternoon—you have to wonder: how much more bad news can we throw at this market?
Now take a look at the December live cattle contract. Again, you can distinctly see five waves down: Wave 1, Wave 2, a long Wave 3, Wave 4, and now a shallow Wave 5. Wave 4 also stayed underneath Wave 1, which gives this count more credence.
Here’s what I find particularly interesting. Since we had an extended third wave, a lot of times Wave 5 will simply be equal in length to Wave 1.
So, if you take the length of Wave 1—which is represented by the line I’ve drawn here—and then apply that same length to Wave 5, look at where it takes us...
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