The live cattle futures market extended the major (long-term) uptrend on its continuous monthly chart during February. The February contract hit a high of $144.075 before the April finished the month at $141.425. Meanwhile, we continue to see a series of bearish crossover by monthly stochastics above the overbought level of 80%, signals the major trend should be turning down. Fundamentally the market remains long-term bearish, as indicated by futures spreads running below previous 5-year lows as far out as the Dec 22-Feb 23. So, what’s holding the market up?
Cash. The cash market continues to hold between $139 and $142, keeping nearby futures from posting sharp breaks. Then when it’s time to roll to the next contract (e.g. Feb to April), the first deferred contract has tended to be strong in relation to the nearby skewing this continuous monthly chart. Until the cash market breaks it will be hard for technicals to turn bearish. This means live cattle have reverted back to their characteristic cash drives futures.
Lastly, the beef cutout markets were hammered during February with choice closing the month at $257.51, down $32.89 for the month. Select didn’t fare much better with its final price for the month reported at $253.41, $29.86 below the end of January.