Has live cattle hit bottom?

Market Pulse: May 7

Last week June live cattle opened at 114.150 and closed the week at 115.375. On April 24, you can see the large drop down to 111.575 caused by the confirmed Mad Cow case in a milk cow in California. A few days later on May 3 we see a large move up to a close of 115.875, caused by the US Export report released that day showing larger beef exports year-to-year, highlighting the possibility that the Mad Cow effect may have only lasted one day. South Korea is sending an inspection team to the US this week to check the safety of American beef because of the Mad Cow confirmation. We will see what they find. Last month’s Cold Storage report and Cattle on Feed report did show a bearish tilt to Live Cattle.

On the daily chart below, we see the technicals showing a weakening trend with ADX now at 23. +DI has crossed up over –DI, but both are now dropping below 20. MACD crossed up over the signal line adding divergence on the May 3 move up. Stochastics have corrected from oversold territory and are just dipping into overbought territory. For us catching the train down, March 5 was a well timed short.

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