In the December Live Cattle contract, we saw a sell-off and close at 116.825 in yesterday’s trade. If we continue to see prices fall and close below the 116.400 level, then that should turn this into a bear market. The 50 Day Moving Average is at 116.375 before the opening today, if there is a breakthrough of this level I could see prices continuing to fall possibly to the 114.500. If there is a failure to breakthrough the 50DMA, then I could see these levels climbing back up and trying to make a push through the 118.500 price level.
Last week’s Cattle on Feed report was bullish with the placements being 5 percent below the level from last year, and marketings 4 percent below the level from last year. However, the slaughter numbers up from year to date (16.2% from last year’s pace), near-term supply levels seem to be putting downside pressure on the Dec cattle. There has been little activity in the cash market this week, with the Iowa and Minnesota trade showing $110 for only 120 head of cattle on Tuesday. Choice cuts were up 1.71 @ $231.10 and select .49 cents higher @ $198.31. The USDA estimated cattle slaughter is at 119,000 head on Thursday, totaling 356,000 head week to date. Those numbers are estimated to be 4,000 above the previous week and up 7,000 on the same date from last year. Export sales were also up in the week of 10/18 from last week @ 14,637 MT with shipments of 16,654 MT.
Live Cattle Dec ’18 Daily Chart