Blue Line Express

Cattle Market Update (2.25.18)

Last Week’s Trade

 

For the week:  April fats finished 2.925 lower, trading in a range of 3.675.

 

For the week:  March feeders finished 3.65 lower, trading in a range of 5.75.

 

Cattle Commentary:  Friday’s Commitment of Traders report showed funds extended their net long position in live cattle to 98,730 and 12,115 for feeders.  Keep in mind that this data is only compiled through Tuesday and it was a short week, so this was essentially the previous week.  Funds were likely reducing that risk ahead of Fridays Cattle on Feed report as fat cattle finished lower all four sessions.

 

Cattle on Feed:  107.9% vs the range of estimates from 107-108.5%

Placements: 104.4% vs the range of estimates from 99.6-100.1%

Marketings: 106.1 vs the range of estimates from 105.5-106.6%

 

All in all, it is a relatively neutral report in our mind.  With that said, we take the data with a grain of salt in terms of what it means for future price action; there’s a reason we joke about it being called “Cattle on Fade”.  I’ve talked to traders, clients, along with other market participants who spin it to fit their positions.   This day in age it is easy to fall into the trap of seeking affirmation over information.

 

The bulk of the cash trade last week came in at 128, this was 2 lower from the previous week.  Volume is starting to pick up in the June contract as some funds begin to roll positions; selling June and buying April.   This will be something to keep a very close eye on over the next month.

 

Cattle Technicals

 

Live Cattle (April)

 

Live cattle futures held support from 124.875-125.45 on the first test midway through the week, but the inability to “snap back” raised some caution flags for the bulls which put them on the sideline going into the weekend.  We often compare technical levels and price as a sky scrapper and a wrecking ball (respectively).  Each time a level is tested, it becomes less significant; the more times it is tested the more likely it is to give way.  If we don’t see what we want after the first test, we start to reevaluate instead of digging our feet in and thinking we are smarter than the market (a bit of a tangent here).  The bulls remain in control with significant support coming in below the market, with multiple indicators from....Please sign up for a Free Trial at Blue Line Futures in order to view our entire technical outlook and proprietary bias and levels.

 

Feeder Cattle (March)

 

As mentioned last week, the March feeder cattle chart is a little less constructive than the fats.  The trend is your friend until the end when it bends, and the failure to make higher highs last week could be that bend.  The market looks more range bound than anything with all the major moving averages essentially moving sideways with price sitting right in the middle of the range from the August lows and November highs.  We would like to be a buyer at better prices near....Please sign up for a Free Trial at Blue Line Futures in order to view our entire technical outlook and proprietary bias and levels.

 

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.