The Long Awaited Rally In Live Cattle Futures

As most commodity traders have fallen asleep watching live cattle futures trade for most of this year, the market might actually be coming to life. Live cattle futures have been trading in a tight range for the last six months, but the market moved its limit for the day on news that beef output in May was down 8.4 percent from last year. This is a big drop and now traders are worried the shrinking supply numbers have finally hit the market.

August live cattle futures closed 3.00 points higher on Monday to close at 85.40. An ultimate breakout above the 90-level would look extremely positive on the charts. At the very least, I would say this market has put in a bottom and the lows around the 80-level should hold.

It will be interesting to see of lean hogs can also try to rally. This market is still suffering from the swine flu outbreak and demand has yet to fully recover. Prices of hogs will eventually get too low if they aren’t already there. This market is setting up for a good long-term buy, as demand will eventually return and the breeding numbers should continue to fall into the near future.