Futures exploded lower and initially traded right through support. What was support, should now become resistance. And once again Feeder Cattle led the drive lower, and did not give up the ship until the CME expanded limits. We are expecting this rally to be dependent on feeder cattle in the near term. We will likely hold our option positions as the market is below the 100 bar, but will start to tweak them to capture volatility. The February should find initial resistance at 100 day moving average and at the 50% retracement level. The COF was in line with pre report estimates and should not affect the market either way. One would assume the markets try to consolidate and shrink option volatility that has gone off the charts.
Live cattle traded lower on the week. Cash trades were the lowest on Wednesday and then moved slightly higher as we progressed into Friday.
The C/S spread is at 8.69. Choice 238.57 and Select 229.88
Slaughter is expected to be at 563,604 this week.
Feeder cattle broke lower from the triangle formation and accelerated the beef dive. Higher trending corn prices along with seasonal factors started probably the biggest break seen in a very long time. We saw a bit of stabilization and the market traded into support near 215 versus the January contract. It’s a bit early to call a bottom, but this could be a good place to start a decent rally. Timing wise this is pretty much in line with the massive early winter sell off of 2012.
Blue Reef Agri-Marketing, Inc