?Mooving? On Up
Today’s Spotlight Market
Feeder Cattle futures are trading at record price levels, as a sharp decline in feed costs and high retail prices for beef have encouraged ranchers to increase herd sizes. However, it takes between 1 and 2 years to get Cattle to market-ready weights, and the current supply of young Cattle remains very tight. These factors have the potential to keep the bull market for Feeder Cattle in place going into 2015.
Fundamentals
No pun intended, but the ?bull? market for Live Cattle futures remains intact, as new all-time highs have been made this week. Higher prices being paid for wholesale beef are expected to allow meatpackers to become more aggressive in their pricing in order to secure market-ready Cattle to meet retail beef demands. Cash market traders note fewer Cattle being marketed for sale this week, with owners looking for higher prices as supplies continue to be tight.
There is real fear by traders that cash Cattle prices will continue to rise faster than wholesale beef prices, which would greatly diminish the enthusiasm for beef processors to aggressively bid for Cattle as profit margins get squeezed. However, the recent jump in wholesale beef prices this week may put some of those fears to rest for the time being.? Seasonal tendencies are for Cattle futures prices to rise going into the winter month contracts, as winter weather can slow cash market sales.
The real question becomes will retail consumers be willing to pay even higher prices for beef at the grocery store, or will we see a significant shift in retail demand to other protein sources, which could trigger an abrupt end to this historic market run.?? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for February Live Cattle, we notice prices ebbing upward, as recent market moves have been a series of price consolidations followed by short price bursts higher. This movement in prices may actually be adding stability to the uptrend, as opposed to a more vertical ?parabolic? price move.?
The 20-day moving average has acted as support for a majority of the bullish price trend, so this key indicator should be watched for any signs of a possible price correction. The 14-day RSI has moved into overbought territory, with a current reading of 75.23. 170.000 is now seen as the next psychological resistance level for February Live Cattle, with support found at 158.400.??
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