Morning Futures Roundup
Cattle Prices Struggle to Move Higher as European Woes Weigh on Commodities
Live cattle futures have been resilient in 2012, overcoming a "mad cow" scare and European woes that have taken some of the luster out of commodities. Fundamentally, the outlook for Live Cattle prices is positive, as Cattle placements in feedlots is expected to be lower than last year's totals due to high feed costs. Beef production is also expected to be lower going into the summer, at the same time that consumer demand normally increases during the summer grilling season. Nearby futures prices are running at a $3 to $4 discount to cash prices, as many speculators continue to shun commodities due to European concerns that have taken center stage and some traders have moved into "risk-off" positions such as the US Dollar and Treasuries. However, should the European debt crisis begin to settle and consumer confidence begin to improve, we may see some traders begin to stampede back to the long side of the Cattle market.
Looking at the daily chart for August Live Cattle, we notice what could be construed as a head and shoulders bottom or a 'V' bottom forming. Now prices have moved above the 20-day moving average (MA), but still have a bit further to advance to reach the 200-day MA which is currently located near the 124.250 price level. The 14-day RSI has turned neutral, with a current reading of 49.31. Near-term support is seen at the 20-day moving average, currently near the 118.625 area, with resistance found at the May 21st high of 122.425.
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