Sort & Cull

The live cattle complex didn't bat an eye about trading lower all throughout the day Monday, as the market seems to be showing signs of technical exhaustion.

But in all fairness, following last week's exceptional performance, it's understandable that the market is feeling overexerted. From a technical standpoint, it was incredible to watch the spot February contract break through resistance at $190 and test price points not seen since last March. Throughout the week, the December live cattle contract gained $6.28, and the spot February contract gained $5.85. Thankfully, late in the week market fundamentals complemented trader's eagerness, as the cash cattle market traded anywhere from steady to $8.00 higher!

Last week Southern live cattle traded from mostly $191 to $192, which is steady to $2.00 higher than the previous week's weighted average. Northern dressed cattle traded anywhere from $295 to $311, but the majority of the business was done at $302 to $305, which is $5.00 to $8.00 higher than the previous week's weighted average.

The week's total movement in the negotiated cash cattle market totaled 77,128 head. Of that 68% (52,132 head) were committed to the nearby delivery, while the remaining 32% (24,996 head) were committed to the deferred delivery. Heading into this week, new showlists appear to be lower in all three major feeding states.

The obvious question that comes to mind as we look over the next two and half weeks of 2024 is: Will the cattle market's rally be able to maintain its gusto? Or will sluggish, holiday-shortened weeks cause the cattle market's rally to be on standby until after the new year?

I personally believe the cash cattle market may have the ability to continue to inch prices higher as feedlot managers are current enough with their showlists to simply roll cattle over until the upcoming week if prices are not up to their standards. Packers, on the other hand, are going to try to limit the weeks where prices trade more than $1.00 to $2.00 higher as those weeks are exceptionally painful for their bottom line. Packers will try to keep the market as close to steady as they possibly can through the year's end with slowing chain speeds around the holiday season. But with front-end supplies of market-ready cattle manageable, packers have their work cut out for them as feedlot managers are going to control the market's leverage through the year's end and into 2025.

But from a technical standpoint, I believe the market could drift slightly lower or chop sideways through the year's end as advancing the contracts any more at this point seems to be more risk than traders are willing to dance with.

ShayLe Stewart can be reached at shayle.stewart@dtn.com

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