We are seeing an uptick in the demand for U.S. beef lately, along with a positive indication in world trade, there continues to be some support in the cattle market. In the August contract there was a 100 point lower close on Friday finishing with an outside down day. If you view the market on a weekly basis, you would see there was a new contract low that was made on Monday, but finished 212 points higher by weeks end. This is a good indication that there was a key weekly reversal adding additional support to the market.

Fundamentally, the market has a lot of supply and weak prices, further hurting the cattle market but technically it is showing signs that a low is indeed in place. The last commitment of the Trader’s Report showed managed money traders are net long 29,000 contracts. CIT traders reduced their net long positions by 1,695 contracts to a net long position of 116,808 contracts. The USDA estimated cattle slaughter came in at 120,000 head Friday and 60,000 head for Saturday. This brought the total for last week to 665,000 head, up from 662,000 the previous week and up 2.5% from last year. With lower weights, however, beef production for the week was up just 0.8% from last year. USDA boxed beef cutout values were up 89 cents at mid-session Friday and closed 63 cents higher at $219.66. This was down from $219.82 the prior week. Cash cattle traded at $109 in Texas and Kansas on Friday with Nebraska at $109 to $111.50 for a weighted average of $110.90. The positive global trade talks along with a positive tone for the global economy should have this market move to the upside for the upcoming month. The first level of resistance that the market should reach in the coming weeks would be to the $106.457 level where I believe it will break through there and make a move to the 50-day moving average around the $107.500 price level.

Live Cattle Aug ’19 Daily Chart

Live Cattle Aug '19 Daily Chart

Peter McGinn

Peter graduated from DePaul University with a degree in Economics. Peter started his career with an IB at the Chicago Board of Trade. He then moved on to TradeStation Securities for a time before starting as a Market Strategist at RJO Futures in 2018.