Live and feeder cattle futures have seen a substantial break from recent highs as funds have liquidated long positions on concerns about recession and following the panic selling in the stock market.
So if the stock market can stabilize will the cattle futures be able to stage a recovery?
Scott Varilek with Kooima Kooima Varilek says, “That is a question we would all love to have the answer to. It’s been quite the debacle here with the stock market and how fast we corrected this market. So, we turn to the cash and say is the cash holding together?”
He says cash trade has been holding up as the packers look for inventory with buying starting this week for the Labor Day holiday.
Varilek says the live cattle futures are still well below cash and so that could result in a $3 to $5 recovery fairly quickly.
“We’re still holding some of these long term areas on the charts. The October live cattle held long term support at the 2014 highs right around $172, I like to see that,” he adds.
“Cash feeders we did break $10 to $15. The index is still $10 above where August feeder cattle futures are so there should be plenty of room for recovery as long as that stock market can try to hold in here,” he says.
Feeder cattle futures made some new lows in the deferred contracts and did some serious technical damage to the charts in almost a mirror image of the S & P chart.
However, Varilek says, “Long term we’re still holding these nice uptrends. The things that makes you nervous is you see how much room there is lower and just how high we are compared to history. We know eventually we will go there when we come into more numbers but it doesn’t feel like that supply right now is over running us.”
