RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Agricultural

Fourth Quarter Bearish Cattle Supply Shifts Warn for Selloffs

Posted 10/13/2017 9:12AM CT | Manon Lasserre

A turn down from an overbought condition and from a wide basis suggests a short-term correction may have begun for the December Live Cattle market. Given a much tighter situation for the first quarter, a sharp correction for the February cattle will be a buying opportunity and rising stochastics at overbought levels warrant some caution for bulls. A positive signal on December Live Cattle for trend short-term was given on a close over the 9-bar moving average. The close below the second swing support number puts the market on the defensive and the next upside target is 119.900. The next area of resistance is around 118.450 and 119.900, while support hits today at 116.100.

Dec ’17 Live Cattle Daily Chart

Dec '17 Live Cattle Daily Chart

A bearish signal was triggered in feeder cattle on a crossover down as far as daily stochastics, and declining momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. Fundamentally, feeder futures fell as pressures in live cattle futures and “ideas prices” have topped were expressed in the market. Both live and feeder cattle futures expressed expected volatility yesterday and going into the open today after moving higher early and then pulling back down with cash cattle before making a small rally on the close. 

Nov ’17 Feeder Cattle Daily Chart

Dec '17 Feeder Cattle Daily Chart

Manon Lasserre