Call the Market

For almost a month, the live cattle complex has grown comfortable -- trading sideways in its current trend as traders try to push the contracts higher but can't successfully do so without increased fundamental support.

Based upon last week's developments, it's unlikely that fundamental support will increase this week for two main reasons: It's likely that boxed beef prices will be steady at best, and unlikely that fed cash cattle prices will trade higher.

Point number one: Boxed beef prices will trade steady at best this week. From a seasonal perspective, the market isn't anticipating increased demand for at least another month. There could be some early buying in November to offer high end cuts for the Thanksgiving holiday, but given that Thanksgiving is primarily a turkey-focused meal, even that could be wishful thinking.

Point number two: Fed cash cattle prices will likely trade lower. Last week's negotiated cash cattle trade totaled 88,019 head -- the fourth largest weekly volume of 2026. And of that 88,019 head, 80% (70,390 head) were committed to the market's nearby delivery, while the remaining 20% (17,629 head) were committed to the market's deferred delivery option. Consequently, this puts packers back into the driver's seat of the fed cash cattle complex as they now have ample supply around them and won't likely need to participate in the fed cash cattle market as much this week.

Although this plays much less of a role in the marketplace, the monthly World Agricultural Supply and Demand Estimates (WASDE) report is set to be released on Friday, Oct. 9, which will pull some traders' time, focus and attention.

So, while cattlemen continue to yearn for increased fundamental support in the marketplace so that the contracts can again rally and trade higher -- from a 10,000-foot view -- it's unlikely that that support will arise this week. The market has mostly traded between its 40-day and 100-day moving average over the last month, and that's not likely going to change this week.

And when viewing the feeder cattle complex, a similar dilemma occurs, as last week the spot November contract attempted to conquer the market's resistance at its 100-day moving average but unfortunately wasn't able to do so. And this upcoming week, some parts of the West are expected to get rain/snow, which wreaks havoc on calves this time of year and could make buyers apprehensive about diving into bawling calves at sale barns.

Needless to say, although traders remain interested in supporting the cattle complex and will likely jump at the opportunity when it's presented, it's unlikely that either the feeder cattle complex or live cattle complex will break out of its current trading range this week, as plenty of hurdles have presented themselves for the week ahead.

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

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