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Cattle Commentary: In yesterday’s report we talked about the funds length in cattle futures, stating that “This is a lot of length for the funds, leaving risk open to long liquidation.”. That is exactly what happened today, admittedly more aggressively than we would have thought. Today was more about money flow than a shift in fundamentals. With that said, the shift in money flow could influence fundamentals (cash). There have been talks of some cash coming in from 127-128, steady to softer than what we’ve seen recently. Tomorrow’s Fed Cattle Exchange has 755 head offered.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 228.22 / 230.35
Change from prior day: / .86 / .72
Choice/Select spread: / 7.87
Live Cattle (April)
In yesterday’s report we stated: “With the funds having good length here, we have a hard time seeing them getting significantly more aggressive. We continue to believe that there will be opportunity on both sides of the market but favor the sell side here to start the week. First support this week comes in from 128.10-128.50, a close below here could be the spark to trigger fund selling.”. That break below trend line support was the straw that broke the back, leaving the door open for a continuation towards 124.975-125.30. If the dust settles and the market can defend support, we would look at that as a great opportunity to look aggressively back to the buy side.
Resistance: 127.50**, 128.50-128.60***, 130.45-131.00**
Support: 124.975-125.30****, 123.50**
Feeder Cattle (April)
Yesterday we stated: “Smack dab in the middle of that range, we don’t have a whole lot of conviction on either side here. IF we worked closer to 144, we would be willing buyers on the first test. On the flipside, resistance comes in near 148.”. Prices managed to work towards that 144 level, holding our more specific 3-star support pocket from 143.50-143.75. As mentioned above, this is a buy on the first test, the bulls do not want to see prices revisit that pocket. First resistance tomorrow comes in from 145.20-145.85.
Resistance: 145.20-145.85**, 147.325-147.85***
Support: 143.50-143.75***, 140.35-141.30****
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