The information and opinions expressed below are based on my analysis of price behavior and chart activity

Tuesday, July 29, 2025

October Live Cattle

New contract highs for Live Cattle on smaller domestic supplies of beef.

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Every morning, at about 8 AM CST, I post a short video highlighting where I see opportunities in the futures markets.  You can view my most recent video here   

 October Live Cattle (Daily) 

Today, October Live Cattle closed at 226.450, up 1.675 on the day.  That adds to the 1.625 this contract gained on Monday.  This week’s activity follows the USDA data that was released last Friday after the close.  The Cattle on Feed data was seen as bullish, as On Feed, Placement and Marketing numbers all declined.  Cold Storage showed that we have less beef in the freezer, nationwide.  And the July Inventory report came in at an all-time low. We have the lowest number of Cattle in the US since recordkeeping began in 1973.  With a larger population to feed, those numbers all seem bullish to me. Adding to the bullish fire are the looming tariffs on Brazilian beef imports.  With Tariff rates expected to come in at roughly 75%, Brazil has signaled that beef exports to the US will not be sustainable, moving forward.  The border with Mexico is still closed, which also served to lower the Placement numbers, as lighter cattle are no longer coming up from the south.  I’ve heard no word on if/when those may resume.  It seems as if the US Government is choosing to err on the side of caution, when it comes to the New World Screwworm.   Prices remain strong and I do not see a fundamental reason for that to stop.  Cash sales have ranged from 230-232 in Kansas and 240-245 in Nebraska over the past week. Futures prices are still below the cash trade, and I would expect the August contract to converge with cash prices before expiration.  (August closed at 229.725 today)

This week’s trade started with a “gap” higher open on Monday morning, but the gap was filled by about 11:00 AM and the bulls seemed to take over from there.  Yesterday the October contract closed about where it started the day, which may have offered some cautious signals.  However, today’s close above that range should give the market some room to go higher. You may notice that blue trendline on the chart above.  I’ve drawn that off of the January-June highs.  That trendline was breached last Wednesday, but profit taking and position squaring in front of the USDA reports, pulled prices just back under.  This week, that trendline has been acting as support.  The 5- and 10-day moving averages (blue/red) have been in a bullish configuration since July 2^nd.  Today those values are at 224.005 and 222.368, respectively.  The 50-, 100- and 200- day averages are all well below the market, with the 50-day (green) being closest at 213.006.  For the most part, that average has been good support all year long, with only a few days of trade below it.  Stochastics (bottom sub-graph) are overbought, but they’ve been that way almost all month and isn’t necessarily a cause for immediate concern.  However, according to Barchart’s Seasonal data prices tend to go down a bit in August. They show prices declining in 6 of the past 15 years.  Looking at the numbers, it seems to me that 60% of the time prices go higher, but the down years have outweighed the up years by just a few ticks.  So perhaps the 9 out of 15 years, when prices increased in August by an average of 1.90 may be more relevant. 

Since the market is setting record highs, it’s difficult, I think, to set overhead targets.  Aggressive and well margined traders may do well to consider long futures positions. By looking at the chart, it appears to me that over the past 14 sessions, the market has interacted with the 5-day moving average (blue) on 13 days. Monday was the only day over that time when it wasn’t touched.  Today that value is at 224.005 (not a tradeable tick, so I’ll call that 224.000) and will likely be a touch higher following tomorrow’s open.  That 5-day average seems like a reasonable entry point to my eye.  You may choose to put a sell-stop, protecting the long futures position, at or just below the 10-day average (222.350) The first target you might choose could be the 230.000 level, as markets sometimes gravitate to big, fat, round numbers.   From the 224.000 mark, that works out to be a $660 risk (before your commission/fees) with a potential profit of $2,400 (before commissions/fees)  Less aggressive traders may do well to consider buying Call options.  One suggestion might be the October 230 Calls.  Today those settled at 4.150, or $1,660 before commissions/fees.  I would set a GTC target at 2x what you pay for the option.  Options that are closer to the money (226, 227, 228, 229) will offer a better delta, or rate of change v the futures, but they’re also a bit more expensive.  If you’re a cattle or beef producer, I see no reason to get short this market, as the both the market trend and fundamentals are currently pointing toward higher prices.

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Every morning, at about 8 AM CST, I post a short video highlighting where I see opportunities in the futures markets.  You can view my most recent video here   

 October Live Cattle (Weekly)

The weekly chart of October Live Cattle indicates a market that has been in a strong uptrend since late last summer. The 5- and 10-week moving average have been in a bullish configuration since roughly the middle of March.  Today those are at 220.005 and 215.005 (blue, red) respectively.  We did clear above the trendline resistance with last week’s close, and so far this week, prices have been moving up away from it.  The weekly Stochastics have been in overbought territory all month.    Looking back over the chart, you might notice that it has stayed overbought for extended periods and prices may not be ready to pull back, just yet. Fundamentally, I believe that we still have less cattle in the US.  Demand remains high and the closure of the Mexican border for nearly the whole year, so far, isn’t correcting that situation.  US Beef imports remain at elevated levels, according to the USDA.  Until we see signs of herd-expansion here is the US, I would expect the long-term uptrend (since 2020) to remain intact.   I know many people recall the abrupt reversal the cattle markets made in late 2014. That peak was made in the middle of November 2014 and prices didn’t really look back.  Given the current technical and fundamental conditions, I don’t see that happening just yet.  If prices do pull back, I would expect the 5- and 10-week averages (blue, red) to hold as support, much like they’ve done all year long.  We’re within just a couple of days of the end of the month.  At this writing, the October contract has gained 16.275 in July.  That’s certainly the largest monthly gains we’ve seen in this October contract.  That may spur some profit taking in the next day or two, but I don’t think that managed money (funds) will run for the exits just yet.

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Every morning, at about 8 AM CST, I post a short video highlighting where I see opportunities in the futures markets.  You can view my most recent video here   

Jefferson Fosse  Walsh Trading

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