Farm Progress

Will live-cattle futures make a new high and wait on cash to fall, and is it time to market feeder cattle very soon?

Chris Swift 1, Blogger

April 26, 2017

2 Min Read
If the August feeder contract breaks a new high, look for a top of the minor fifth-wave of primary wave 3.Swift Trading Company

If new contract highs are made in live cattle, a really tough choice has to be made.

Although a new contract high will suggest that this wave sequence is nearing its end, it doesn't necessarily suggest that futures will go lower. The discount will make it exceptionally difficult for futures to fall much further without or until cash weakens.

From what I've seen so far on the Fed Cattle Exchange this morning, $135.00 bid is not buying any cattle. So again, difficult to see futures back off much. However, you could reach a peak in the fat futures in the next week or so and have them go dormant while cash continues to bow to the forces of numbers to deal with this summer.

Due to the change in basis spread of feeders, it is not the same scenario for feeders as fats.

When or if the August contract breaks a new high, I will be on the hunt for a top of the minor fifth-wave of primary wave 3.

I will begin urging producers to solidify as much inventory as possible on cash forward contracts and then roll down to futures and options if needed. So, get your pencils out now and calculate the numbers you need gone between May and end of September or potentially October.

What I anticipate upon completion of the primary wave 3 is a primary wave 4 correction that may be significant in time and price. My analysis suggests this current move higher will be an opportunity to complete marketings going into the fall of the year. I recommend spending some time visiting with your buyers to get a feel for what they anticipate.

While you may not hit the top price, I will assure you that attempting to solidify the cash forward contract will be easier on the way up than if waiting for the top and prices begin to soften. Although hype has increased, I would urge you to view this as just a marketing opportunity. 

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. Past performance is not necessarily indicative of future results.

About the Author(s)

Chris Swift 1


Chris Swift is a broker and advisor in Nashville, Tennessee, offering technical and mechanical analysis of the commodity market to help people improve their risk management.

To contact Swift about hedging or to subscribe to his daily market comments at:

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