Price action: August live cattle fell $0.375 to $174.575 and nearer the session high. August feeder cattle dropped $2.245 to $242.275. Feeder prices closed near mid-range today after hitting a contract and record high Wednesday.
Fundamental analysis: The cattle futures markets saw profit-taking pressure today after recent gains. Cash market fundamentals are starting to weaken just a bit but remain overall solid. Cash cattle trading started around $178 in the southern Plains, mostly $1 to $2 lower than trade in that region last week. Northern feedlots are so far passing on lower bids, as their supplies are tighter. After plunging yesterday, wholesale beef prices at noon today dropped again, down $1.24 for Choice to $321.54. Select grade beef fell $2.23 to $290.46, taking the Choice/Select spread to $31.08. Movement at midday was 61 loads.
Live cattle futures are still trading under the cash market, which should keep a floor under futures prices in the near term. The futures discount reflects the general cash market weakness experienced by the cattle market during the summer months.
The two-day rebound in the corn futures market, after its steep slide recently, also limited buying interest in the cattle futures markets, especially those for feeder cattle, today.
Cattle traders will closely examine Friday morning’s weekly USDA export sales report, which is delayed by one day due to the Independence Day holiday on Tuesday.
Technical analysis: The live and feeder cattle futures bulls still have the solid overall near-term technical advantage. However, more selling pressure in live cattle futures in the near term would raise the specter of a bearish double-top reversal pattern forming on the daily bar chart. The next upside price objective is to close August futures prices above solid resistance at the contract and record high of $178.10, basis nearby futures. The next downside technical objective for the bears is closing prices below solid technical support at $168.10. First resistance is seen at this week’s high of $177.35 and then at $178.10. First support is seen at today’s low of $173.425 and then at $172.00. The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $250.00. The next downside price objective for the bears is to close prices below solid technical support at $235.00. First resistance is seen at $244.35 and then at $246.00. First support is seen at today’s low of $240.80 and then at $238.00.
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