Live Cattle - Top ?

[syswizard]

That situation sounds unsustainable.....farmers buying cows.
That said, Dec hit a new contract high today @ 168.25

 

[blackcattle]

The cow herd is shrinking still. It takes time and infastructure to grow beef cattle. Another casualty of the high grain prices has been the cowman. Fences pushed out, pasture plowed up, this ground is not likely to return to grass.. Now its up to price to cull demand or create supply. Who knows where price is going and what the violent swings getting there will be. The guy that said farmers buying cattle to add value to their corn crop is right. I think farmers in the fringe acres that dont have livestock are gonna get an education this year.. Demand for beef is on the rise while supply is falling and you cant just go plant a million acres of cows....

As always time will tell..

 

[Handle123]

Excellent head & shoulders at the highs and thereafter resistance on retracement.

One reason I never go by fundamentals, cause charts more time than not show the path.

 

[syswizard]

Excellent head & shoulders at the highs and thereafter resistance on retracement.

One reason I never go by fundamentals, cause charts more time than not show the path.

And don't forget the rule of "even numbers" i.e. 150, 160, 170, etc.
Dec contract hit 169.25 (close enough to 170) and then backed-off 4 pennies ! (FBO=Failed Break Out).

This is really gonna get wild....with the super low supplies coupled with a weaker economy.
Assessing the demand at these prices is the key IMHO.

 

[thefuturestrader]

Another aspect of this cattle market puzzle I have been paying attention to is the Commitment of Traders. The funds have had pretty long positions in both feeder and live cattle for a while now, although the COT is a "lagged" indicator. You can't tell what funds are doing on a daily basis, and the COT only comes out once a week.

 

[Handle123]

Started selling early Dec Futures between 167.35 and 167.10, ave price 167.175.
Bought Dec 170/172 Calls to hedge at ave 2.60/1.85
At ave 164.175 on futures, hedges be liquidated, mental stops lowered to breakeven minus losses on hedge.

Already lost the $600 other day in futures

That was a quick minus $600 each on all entries, options are mildly profitable. Tomorrow will watch five minute bars, want to see price to cover the losses and pay me a little for my time.

Just an incredible Head and Shoulders pattern on five minute near the highs, could not ask for more.
Liquidated Dec 170 @ $2.60/$3.30 and Dec 172 @ $1.85/$ 2.60 for profit of 1.45, so overall on this position of futures/hedge, lost $20

Sold Dec futures at 169.25 ave,
I waited 60m to see if Cattle was going to break as the options were huge money near all time highs.
Bot Dec 172 @2.50 and Dec 174 @1.80
Friday looking to get out of options if market stays no higher than the close fifteen minutes after open unless report "Import and Export Prices" makes market move. Will be watching five minute chart. Whatever loss will be subtracted from entry plus a dime for new breakeven stops.

 

[syswizard]

Well, whatever happened with that report affected the back months....they're weak.
Now we have a steeper backwardation effect.

 

[syswizard]

What report was issued today to cause a 2 penny drop ?
Here is John Otte's fine analysis of the market....which appears to be bullish:
http://farmfutures.com/story-livestock-call-john-otte-22-97489

 

[syswizard]

Bottom line. Advancing wholesale beef cutout values and last week's higher negotiated cash trade maintained support for front-month October fed cattle. Fears of consumer resistance to paying high prices and tight feeding and processing margins could derail the rally.

Yes, this is making a move above $1.70 unlikely IMHO.

 

[Handle123]

Sold Dec futures at 169.25 ave,
I waited 60m to see if Cattle was going to break as the options were huge money near all time highs.
Bot Dec 172 @2.50 and Dec 174 @1.80
Friday looking to get out of options if market stays no higher than the close fifteen minutes after open unless report "Import and Export Prices" makes market move. Will be watching five minute chart. Whatever loss will be subtracted from entry plus a dime for new breakeven stops.

Used five minute bars on 13th to find best place to liquidate options but lost 0.95 on the Dec 172 and 0.70 on Dec 174. So entry was 169.25 minus 1.65 is 167.60, Protective stops go in ten minutes after market opens at 167.525. First target is 12 points.