Cattle Rally Struggles Against Fundamentals

A DTN/Progressive Farmer article

Starting last Thursday, we saw the cattle complex begin to reach for higher prices following the last two months of severe deterioration. But as traders and cattlemen alike assess the marketplace and try to gain an understanding of whether this rally will be successful or not, there are a couple of factors that we need to mull over and analyze.

First, without the help of stronger market fundamentals, it's going to be difficult for both the live cattle and feeder cattle contracts to successfully conquer the market's closest resistance at its 40-day moving average. The spot October feeder cattle contract is closer to reaching that resistance threshold than the spot October live cattle contract is -- which could mean that the feeder cattle market's upward potential is going to be limited sooner that the live cattle markets. And while yes, fed cash cattle prices did trade mixed last week with some higher prices -- traders are going to likely need more confidence and support than what the fed cash cattle market can lend right now. And seasonally boxed beef prices aren't expected to lend the market much support until late in the fourth quarter -- which doesn't help the market much right now.

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