Last week February 2013 Live Cattle opened at $130.375 per hundred pounds and closed the week at $130.400. In January 2013 Feeder Cattle we saw an open last week at $145.050 and a weekly close at $148.175.
Looking at the daily chart, you see a very nice move up in February 2013 Live Cattle in November 2012 from 129 to just below 133 with ADX reflecting a strong uptrend back then. The drop we have seen to 130 now has ADX at 24, reflecting a weakened trend. The DI Differential is rising with DI- over DI+. MACD is bearish and Stochastics are mid-range and dropping.
Proceed to Page 2 for the latest COT Data...
On the five-year weekly chart, you can see this past week Producers added to net shorts now -98,202 contracts. Swap Dealers added to net longs now 88,985 contracts as did Managed Money, now at 40,377 contracts.
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...
So where does beef go in 2013? Well, you can see what big money will do to push up cattle prices. But the fundamentals do not look very good for live cattle. First the U.S. herd numbers are at very low numbers. Last count 97.8 million head. Over the past few years we have seen cattle producers go through a major breeding stock and culling cycle. The drought in 2011 in Texas and the southern plains helped reduce calf and feeder cattle supply.
Then we saw the worst drought in 25-years send grain prices to record highs and the lack of available grazing lands because of the drought continued producer liquidation. By the fourth quarter, 2012 beef production was down by 3.5% from the previous year.
One item that helped keep prices down was the weights were at record highs, however expectations are for possible drops in weights, which would be bullish. Historically between 1Q and 2Q beef production increases by 300-400 million pounds, expectations for 2013 are for an increase of 140-million pounds and it could be less.
Another bullish sign for 2013 is that the USA is expected to be a net importer of meat. As world beef demand increases and supplies drop, we could see a very bullish 2013 for Live Cattle. If recognized, we could see price action in 2013 between $135-$150. Make sure you watch big money as they will signal the next run up, like in all commodity markets.
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