Live cattle futures are reversing early losses from extended profit-taking efforts and faded hopes of developing cash cattle trade. Cash cattle activity remains quiet, with packers seeking to buy animals $1 or more lower than last week, while feedlots want steady or better prices. Recent extended cash negotiations have been in packers’ favor, though they are thought to be short-bought on near-term slaughter needs after several weeks of light purchases. Choice values rose 47 cents while Select dropped 32 cents, with packers moving 120 loads on Thursday. February live cattle dipped below the 40-day moving average near $156.62 before rebounding, with initial support lying at $156.40 and initial resistance at the 20-day moving average around $157.32. In my opinion with last week’s cattle on feed report being a bullish report with On Feed 3% lower, Placements 8% lower, and Marketings 6% lower but slow demand with the cold storage report showing a 7.3% increase from a year ago, higher prices may be limited. Producers are carrying all the risk in the cash market right now if they are not properly hedged. I am still of the opinion that, with feed costs at current prices, and all other costs being equal, $140-$145 puts should be bought for breakeven operating costs for feedlots. Cow calf operators, in my opinion [and depending on other variable costs], should be looking at buying cheap $170- $175 puts to protect themselves from any downside risk.
April Live Cattle
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Walsh Trading, Inc.
Toll Free: 800-556-9411
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