Higher Floor, Lower Ceiling?

Around every corner, I seem to find something that pokes a hole in either case - whether it's for more upside potential or the risk of another leg down. I guess that’s what happens when you’re your own biggest devil’s advocate. From a technical standpoint, live cattle had room to fill a few gaps underneath yesterday's close, but after some sideways action today, I’d say your long speculator is starting to push for a floor here.

On the charts, $216 seems like a decent support area for October live cattle. The deeper dip earlier in the month touched $211–$212, but the last sell-off bottomed at $214.62 on September 18 before recovering to close at $215.92. From where I’m sitting, that puts $214–$215 as the next area to watch if $217 gives. Whether buyers step back in there will tell us how much footing this market still has throughout Q4. Similar concept as we get into December – hold above that $217 threshold, and if we recover back towards $223 – that leaves room for some upside potential back in the $230 range.

Cash could catch a little support from an improvement in kills. Today’s slaughter ran 8,000 head above last Tuesday, although we’re still 2,000 behind for the week so far. My expectation is we make up that difference as the week goes on. Word on the street has it - a few of the majors are planning to kill Saturday, which would certainly help us in the coming weeks. But even so, that support may not reach everybody equally. Iowa is expected to catch a little headwind from heavier cattle and more offerings, while the South still looks pretty strong with fewer cattle available.

Feeders made up some ground in today’s trade, but cash seems to be telling a different story - sale to sale, let alone region to region. But overall, the north stands out as softer, with fewer buyers stepping in and demand a little harder to come by. We may need to get some of these heavier cattle cleaned up before the feedyards feel like rolling the dice again. Lord knows we’ve worked harder for less. Have a good evening!

Thanks,

Samantha Cozza-Wright