Today, July 16, live cattle futures closed up $1.40 to $1.50, setting new contract highs. August prices are still well under cash prices.
One contributing factor was the news that South Korea may eliminate the 30-month age limit on U.S. beef imports. In 2008, Korea and the U.S. agreed to only allow beef imported from cattle under 30 months old in an effort to ease public fears over bovine spongiform encephalopathy, or mad cow disease. Another factor was the new trade agreement with Indonesia that was announced yesterday. The bull market continues.
A very conservative trade strategy would be to do bull live spreads. Buy August live cattle and sell October live cattle. Buy August live cattle and sell December live cattle. See the charts below. I would be very surprised if these charts collapse down.
The profit objective is $800 per spread. First notice day is Monday, August 4 for August live cattle. Being out of this spread with a profit by the end of July would be perfect, in my opinion.
The trend is your friend and this bull trend will continue, in my opinion.
Charts courtesy of CQG
If you want to discuss strategies, please contact me.
Stephen Davis
Senior Market Strategist
Walsh Trading
Direct 312 878 2391
Toll Free 800 556 9411
sdavis@walshtrading.com
www.walshtrading.com
Use this link to join my email list: Sign Up Now
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.