Side Note: I will be taking a look at month-end futures spreads in the three major livestock markets in Supply and Demand Commentary.
Live Cattle (Cash Index): After posting a new high of $210 when February opened, the index closed lower for the month at $199, down $9 from January’s settlement. This would be considered a bearish spike reversal indicating a move to a major (long-term) downtrend. However, the market has seen bearish reversal patterns before. Theoretical Positions: Hedgers have likely been rolling put options up during the major uptrend and sold cash as needed. Cash cattle could continue to be sold.
Feeder Cattle (Cash Index): The Index rallied to finish February at 281.06, 1.0 cent off the January settlement. For now, I’ll continue to call it a major uptrend. Theoretical Positions: Hedgers have likely continued to roll put options up and sell cash (see Weekly Analysis).
Lean Hogs (Cash Index): I’m still not seeing anything concrete with the lean hog cash index. After posting a new 4-month low during January, the index reversed course and posted a new 4-month high during February. Based on monthly stocahtics, it could be argued the index is in a major uptrend. Theoretical Positions: Cash hogs could continued to be sold when ready.
