December cattle finished lower by 50 cents today, settling at 151.40. Technical indicators read that there should be more corrective selling in order as the market still remains in overbought conditions. Right now, the market is trading near the 32% retracement level at 151.22, in my opinion, the market could consolidate and trade sideways before rallying again to new highs. If the market does rally, then I believe it will be in the deferred contract months like February or April, rather than December.
Feeder cattle finished over a dollar higher as corn prices were down over 10 cents today with the news that Russia will come back to the table in the grain discussions with Ukraine. A lot of volume was traded today in the March contract as it saw a high of 182.950 but settled on the day at 181.925. With the Fed raising rates again another 75 bps, we could see that pressure these commodities and push prices lower. Although I’ve been hearing that there is a looming beef shortage for Q1 of next year, I am also hearing that further into next year [Q2 and Q3] production will start to increase and supply start to get back to regular levels.
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Peter McGinn
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