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.
Proceed to Page 2 for the latest COT Data...
On the weekly chart, you can see how the “big money” started liquidating positions early March. On March 9, Managed Money was net long 91,271 contracts and as of May 4 were net long 35,082 contracts. On March 9, Producers (true Commercials) were net short -119,025 contracts. Last week they were net short -93,477 contracts. Just look at the weekly chart to see the effect of this.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
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Have a prosperous trading week.