Live Cattle (Cash Index): The live cattle cash index remains in a major (long-term) downtrend. However, the monthly chart is giving us mixed signals at the end of May. Much will depend on what happens with the cash index in early June as a move beyond the previous 4-month high of $188 (March 2024) could lead to a quick test of the spike high at $190 (June 2023). Theoretical Positions: Hedgers likely rolled put options up during the previous major uptrend and sold cash as needed. Cash cattle could continue to be sold until we see what happens during early June.
Feeder Cattle (Cash Index):Similar to live cattle, the cash feeder cattle index remains in a major downtrend despite the index holding near its recent highs. A move beyond the March high of $251.82 could lead to a test of the major high of $254.10 (September 2023). Theoretical Positions: As with live cattle, hedgers have likely continued to roll put options up and sell cash. Additional sales could be made on a move to a new 4-month low below $237.95 (February 2024). Also note the upside price gap left from the January high of $236.32 to the February low.
Lean Hogs (Cash Index): I’m still not seeing anything concrete with the lean hog cash index other than an extended series of lower highs and lower lows. By definition this is a downtrend, meaning the index could come under renewed pressure during June. Theoretical Positions: Cash hogs could be sold based on the idea the cash index is in position to see a strong break during June.
