Futures suggest a short-term top is in place for fed cattle. But bullish long-term fundamentals argue against hedging weakness. Continue to carry risk in cash as price should quickly recover.
Feds Feeders III'07 0% 0% IV'07 0% 0% I'08 0% 0% II'08 0% 0%
Cattle futures failed to sustain trade above $100.00 and turned lower in technical-based trade to signal a short-term top. The top in cattle futures is expected to weigh on cash cattle prices near-term, although heavy pressure will be avoided unless the boxed beef market collapses. There are concerns beef will struggle to compete against cheaper-priced pork near-term, but tightening feedlot supplies make it unlikely there will be a sharp collapse in beef prices. As a result, the downturn in both live cattle futures and cash cattle prices should be short-lived. Bullish long-term fundamentals mean there's no urgency to hedge weakness, but a recovery back to the $100.00 level in futures would be a solid hedging opportunity.
Daily December Live Cattle
Trend is choppy to higher.
Bulls' target on the next bounce will be the contract high of $101.45. Buyer interest above $100.00 has been limited.
Violation of the uptrend leaves support at the August low of $96.50. A drop through that level would open near-term downside risk to the June low of $94.00.
|Printer friendly Cite/link Email Feedback|
|Date:||Oct 6, 2007|
|Previous Article:||Isn't it too early to talk 2008 acres?|