Cattle Prices Test Support, But Is ?Bull? Market In Jeopardy?
Today’s Spotlight Market
While both pork and beef prices are at near record price levels, even poultry prices are starting to fly higher. For most of 2014, the price of whole chickens has soared with record prices seen due to surging demand, as consumers turned to poultry in the face of record high beef prices. However, record prices for chicken has producers ramping up production as high profit margins and lower feed costs should allow for chicken production to rise to record levels in 2015, which should allow for a moderate reduction in retail prices in 2015.
Fundamentals
Your steaks and hamburgers may become even more expensive next year as the USDA expects beef production to decline in 2015. In its World Agricultural Supply and Demand Estimates report released on November 10th, the USDA forecasted beef production to decline by 3.2% in 2015 which follows a 4.9% drop this year. Record beef prices and lower feed costs should see fed Cattle weights increase next year, but heavier market ready cattle may not be enough to offset? what is expected to be lower Cattle marketings in the second half of next year.? Cattle slaughter rates continue to fall below year-ago levels, as packer margins continue in be in the red. Analysts expect a sharp decline in beef production in the 1st quarter of 2015, with some even expecting a record drop from the 4th quarter of this year. With cash Cattle trading as high as $174 per hundredweight, last week, we still see December and February futures trading at little no to premiums to the cash market, as it appears that traders are becoming reluctant to aggressively bid for futures with price levels currently just below all-time record highs.? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for February Live Cattle, we notice prices beginning to run into some resistance at the 172.750 level. This may have been the result of some profit-taking selling prior to last week?s Cattle of Feed report. The 14-day RSI has started to trend lower after resisting a move above 70, which is considered the starting point of an overbought market condition by many technical analysts. Traders may want to keep an eye on the uptrend line drawn from the August 21 low, which was a key support point for the latest up move. A weekly close below this trendline could signal a test of support near the 165.000 price level.
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