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A short-term top for the cattle market?

Ag Marketing IQ: Tight supplies support a bullish market, but China’s actions weaken demand for U.S. beef.

Naomi Blohm, senior market adviser

May 30, 2024

3 Min Read
Beef cattle
Getty Images/DS70

For the past two years live cattle and feeder cattle futures prices have been trading near historical high values.

What’s happened

Tight supplies in the United States continues to be a supportive factor overall. Yet how long can prices remain at these higher values?

Last week’s Cattle on Feed Report was in line with expectations and confirmed yet again that U.S. cattle supplies look to remain tight for the time being. The report had an overall supportive tone, given that on-feed numbers were decreased, placements were fewer than a year ago and marketings were higher than a year ago.

Yet the report was not “over-the-top bullish,” to suggest a further price breakout higher was warranted.

From a marketing perspective

Without immediate and novel bullish news, cattle futures may struggle to trade at overall loftier values, potentially slipping into a sideways trading fashion. For example, August 2024 Live Cattle futures have technical chart resistance at 182 (which is the top of the down trend line from the September 2023 price high) while support lower is at 172, (which is the support line that has held since December 2023).

While the supply story remains friendly, some potential warning signs surfaced this week in regard to demand.

The first blow came on news that China would block U.S. beef shipments from a JBS meat plant in Colorado saying traces of the feed additive ractopamine were found in product destined for delivery to China. That announcement was followed by further news that China also banned meat imports from a cold storage facility in Oakland, Cali.

China then announced that they will allow imports of beef from Australia, lifting bans on imports from five major Australian beef processing facilities. Some of these bans have been in place since 2020.

Going forward, traders will eagerly watch reports on U.S. weekly export sales for beef to monitor global demand in light of this new information.

Prepare yourself

Supply fundamentals remain supportive for cattle prices, yet questions regarding demand may continue to surface in the coming weeks. Have a balanced approach. Bull markets eventually come to an end.  

Reach Naomi Blohm at 800-334-9779, on X (previously Twitter): @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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