Live Cattle (Cash Index): The live cattle cash index remains in a major (long-term) downtrend. I’m sticking with this due to the cash index holding at $189 through the June settlement despite the nearby June futures contract hitting a new all-time high (for a nearby futures contract) of $195.65 shortly before its expiration. This goes back to the old belief that in livestock cash leads futures father than futures leading cash. This isn’t always true, but has proven itself over time. 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.
Feeder Cattle (Cash Index): Unlike live cattle, the cash feeder index posted a new high of $259.04 before closing June at $258.60. Much depends on what happens during July as this could prove to be a lower volume head fake or an actual bullish breakout. If the latter, then technically the index would be projected to extend this move to near $292.00. Theoretical Positions: As with live cattle, hedgers have likely continued to roll put options up and sell cash.
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 July. Theoretical Positions: Cash hogs could be sold based on the idea the cash index could see renewed pressure following June’s lower settlement of $90.594, down $1.137 for the month.
