June live cattle futures are trading at about $18 discount to cash, and the ten-year average is about $10 per Hightower Research’s morning comments. Cash is waning early this week, but slaughter is active and feedlots are current. There is still good movement and good chart support in June cattle around 108.50 (50% EOD FIB 2017) which held today (04/05).
Technically, RJO Market Insights identifies 108.75 and 104.275 in June futures as key S-T Risk and Risk points respectively to maintain a bullish stance.
I have been mentioning in several of my recent posts that the back months look cheap. They still do, relative to cash, so I believe the past and current opportunities are in both inter-commodity spreads and calendar spreads. The daily June chart (below) shows a strong value area 104-109 area and a projection higher if strength holds to the 116-120 area. Both of these areas are consistent with long-term technical areas visible on a monthly chart. The 104-105 area is a monthly washout area identified on a past blog, and the 116-120 area was identified as the largest accumulation area over the past 6 years on a continuation chart. Some EW interpretations point to an intermediate move under 100 which is a stretch.