Fed cattle futures consolidate following cattle on feed weakness

February 8, 2017 9:38AM CST

Fed cattle futures filled gaps on daily charts today created by the bearish COF report on 01/27. Placements were up much more than expected. 2017 production was up 2% year over year, and herd expansion is expected to continue through 2019. This data should keep a short term lid on prices and keep those deferred on the defensive.

The late 2016 and early 2017 advance in prices offered spreaders opportunities to take advantage of the historically wide spreads between Feb/April, and deferred contracts from June through December. There is still room to narrow. April/June should see resistance around $10. (see chart below)

RJO Market Insight’s technical blog identified 117.70 as the latest short term corrective high proceeding the report on 01/30. Dave offered a cautious bearish stance at 116.00 OB in April. Overall, I think long term players should look at the 108 area to the downside and 132 area to the upside for monthly value levels. Active management is advised this year.

Live Cattle April 2017 Daily
Source: Track'nTrade

Livestock Daily Chart

Live Cattle – April over June Spread

Source Track’nTrade

Livestock Monthly Chart

Live Cattle Monthly Continuation
Source: Track'nTrade

Livestock Monthly Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.