Sort and Cull

Again, this week it will remain critical to monitor technical signals as the cattle complex continues to struggle with its direction for the near term.

When you look at the cattle market with a historical, 10,000-foot view perspective, there's never been a time in which prices have been stronger. Even with the market's moderate regression over the last 10 trading days, there's still been no other time in which fed cash cattle prices have been this high. Current boxed beef prices are only trailing behind the highs made during the COVID packing plant shutdown in April and May 2020.

But last Friday, Sept. 12, the spot October contract did close below the market's 40-day moving average, which made traders grit their teeth going into the weekend. Whenever the market closes below a major threshold such as that, there's a strong likelihood more downward pressure could resume. But at Monday's start, the contracts were quick to trade up to $2.00 to $3.00 higher and luckily carried that type of momentum and confidence through the day's end as all the live cattle contracts closed well over $4.00 higher.

But even so, the back-and-forth uncertainty in the marketplace indicates traders aren't confident in much right now. And with the market's fundamentals not expected to lend much support in upcoming weeks, as seasonally this is a time in which fed prices typically regress and boxed beef prices do too, it's easy to see why the futures complex could be subject to a short season here of technical jumpiness.

Last week, Northern dressed cattle traded at mostly $375 to $378, which is $5.00 to $8.00 lower than the previous week's weighted average. Southern live cattle traded at mostly $238 to $240, which is $2.00 to $4.00 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 61,263 head. Of that, 67% (40,913 head) were committed to the market's nearby delivery, while the remaining 33% (20,350 head) were committed to the market's deferred delivery option.

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

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