The cattle on feed report released today was bearish with year-over-year increases in cattle on feed, placements, and marketings. Inventories are growing and prices have fallen. Recently, a producer asked me if prices can rally again. The graph depicts an interesting trend in the feeder cattle market. The orange line traces what could be a head and shoulders formation.
The first rally tested $155/cwt. before retracting and made a subsequent run to $162/cwt. before falling back to $152/cwt. Prices may rally again, but would have difficulty breaking $155/cwt. After that high is tested, prices could fall to support at $135/cwt. If your cattle are not price protected, watch markets closely at the beginning of next week. It is not difficult to secure price floors that protect $1/lb. value of gain.
Take advantage to ensure that any possible price declines do not take that opportunity away.
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