Last week October 2012 Live Cattle opened at $123.000 and closed the week at $125.275. In August 2012 Feeder Cattle opened at $136.325 and closed the week at $137.750.
Looking at the daily chart of live cattle you can see the large move up this past Friday. With ADX at 22.6 this is a weak trending market, but we see DI+ rising above DI-. MACD is bullish with increased divergence up off the signal line and MACD is moving further up away from the zero line on the histogram. Currently, Stochastics are nicely tucked into overbought territory. Watch for a possible correction off of $126.000, which is where the market is trading today. A close above $126.000 live cattle could retest $127.000.
On the daily Feeder Cattle chart you see ADX dropping from near 80 reflecting and extremely strong trend down which started mid June highlighted by the red TS Analyzer set-up. ADX is currently at 51 and still dropping. Keep a third eye on DI+ and DI-. Watch for the DI Differential to hit zero. MACD has dropped all divergence from below the signal line and is at this time crossing up of the signal line. Stochastics have corrected from oversold territory on the price action of the last few days.
Proceed to Page 2 for the latest COT Data...
On the weekly charts for both Live Cattle and Feeder Cattle you see that on the COT Legacy report Commercials are now at a 12-month high in their net positions. On the more transparent Disaggregated report on the weekly chart of Live Cattle you can see Producers liquidating net shorts and Managed Money liquidating net longs. This past week we saw a slight increase in Swap Dealer net longs. Now look back to the end of 2009, you can see live cattle was trading round $80.000. On the disaggregated report you can see what happened with increased buying and selling in “big” money. Looking at the liquidation between April-June 2011 you see the price action reached below $105. Then you see the next increase in buying and selling pushed the market to the high of $130.000. Take a real good look now, where will prices be pushed up to when we see increased buying and selling with the lows at $115.000. Will we see $145.000 in Live Cattle? If so, when? You know what to watch for now, so do not miss it.
In Feeder Cattle Producers and Swap Dealers are both net long reflecting at this time “big” money is not posturing for higher prices.
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...
On Friday, July 20 the USDA reported the US Cattle inventory was down 2% as of July 1, 2012. All cattle and calves totaled 97.8 million, which was below the July 1, 2011 number of 100 million. This is the lowest number since the series began.
June beef production was at 2.25 billion pounds in June, 5% below last year. June cattle slaughter totaled 2.87 million head, 8% below June 2011.
Total red meat supplies in cold storage were down 6% from the previous month, but up 9% from last year.
Cattle on Feed here in the US totaled 10.7 million head on July 1, 2012. This was 3% above July 1, 2011.
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