A temporary peak for the bull market?

For the past two years live and feeder cattle prices have been trading near historic highs.

What’s happened

U.S. real estate continues to help overall. However, how long can prices stay high?

Last week’s Cattle on Feed report was in line with expectations and reaffirmed that the US cattle supply looks set to remain strong for now. The report had a generally supportive tone, considering feed numbers were down, placements were lower than last year and ads were higher than last year.

However the report was not “over-the-top,” suggesting that the additional premium price was appropriate.

From a marketing perspective

Without recent and fresh news, cattle futures can struggle to trade at the highest value, potentially slipping into a sideways trading pattern. For example, the August 2024 Live Cattle futures has technical chart resistance at 182 (which is the high of the price decline from the September 2023 high) while the low support is 172, (which is the line of support that you hold from December 2023. ).

While the supply story remains friendly, some potential signs emerged this week regarding demand.

The first disaster came in the news that China would ban US beef shipments from JBS meat plant in Colorado after traces of the feed additive ractopamine were found in a product intended for taken to China. That announcement was followed by further news that China has also banned meat imports from a cold storage facility in Oakland, Cali.

China has now announced that they will allow imports of beef from Australia, removing import restrictions from Australia’s five largest beef processing plants. Some of these restrictions have been in place since 2020.

Going forward, traders will be eagerly watching the weekly US beef export reports to gauge global demand in light of this new information.

Get ready

Supply fundamentals remain supportive of cattle prices, however questions about demand may continue to emerge in the coming weeks. Have a balanced approach. Bull markets are finally over.

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

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