Chart of the day - August Feeder Cattle
The information and opinions expressed below are based on my analysis of price behavior and chart activity
Thursday, May 29, 2025
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August Feeder Cattle (Daily)
Today, August Feeders closed at 299.925, gaining 4.300 on the day. Earlier this week, the market got hit with a strong bout of selling pressure, but that only lasted for a relatively short time. It turned out that there was a “fake news” article about screwworm being found in Missouri. That report was quickly refuted and pulled offline. As a result, the market got very close to the 50-day average (green, 293.04 today) but bounced away from it. In my opinion, that 50-day average has been solid support over the life or view of this chart. The 5- and 10-day moving averages (blue/red, 298.770 and 297.868, respectively) made a bullish crossover today, after being in bearish territory since May 19th. The last time this market made a bullish crossover, the trend lasted almost a month. Look at the period between April 15th and May 16th to see what I’m referring to. Occasionally, those averages can chop back and forth (see the end of March or the last 1/2 of January) but I don’t think that will happen this time. This market has basically been sideways for 10 days, which relieved the overbought condition. Notice the Stochastic indicator crossing over today and pointing itself higher. The market closed just shy of 300.000, which might be a big, fat round number of resistance and there is a gap overhead at 301.325. Both of those levels could offer more substantial resistance, we’ll have to see how the market behaves if those levels are hit. There’s also a gap below the market, at 284.250, but it appears to me that the upper gap is closer to being in play, so to speak. Aggressive and well-margined traders may do well to consider long positions in the futures, with a risk/reverse level just under this week’s low of 293.05. You could also use Wednesday’s low of 295.350 (or slightly under that) as a risk/reverse level, as well, depending on your entry and risk-tolerance. If this market behaves like it has all year, I would expect new contract highs to be on the horizon. Of course at some point the trend will change, but I don’t see any indication of that yet. Producers that have cattle to sell soon and are looking at the market with an eye toward hedging, may be better suited to consider Put options. However, given that the trend is up, you may find that you’ll need to roll those Put positions higher should the trend continue. Backgrounders that are worried about the next potloads costing more, may do well to consider Call options or Call spreads, in an attempt to hedge against those higher costs. Reach out to me directly, if you have questions, concerns or need help implementing a strategy specific to your operational needs.
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August Live Cattle (Weekly)
The weekly chart for August Feeders indicates that this market has been in an uptrend for it’s entire life. I know, the chart looks different than the other weekly charts I’ve posted, but that’s because Feeder contracts are only live for about a year. Compared to markets like Corn or Crude Oil, that have contracts for years in advance, Feeders are a bit unusual in that respect. You might notice that the market has stayed in a fairly clear channel. The red trendline have been drawn off of the November 11th bar and the February 17th bar on the low side, and the October 14th bar and the January 27th bar on the high side. As of this writing, that channel extends to 302.65 or so on the high side and 287.65 or so on the low side. You might notice that the 5- and 10-week moving averages (blue/red, 299.02 and 293.468, respectively) To my eye, those have held as good strong support, every time they’ve been tested. In fact, this week’s low has tested the 10-week average and bounced. And as of today, the market is trading above the 5-week. Stochastics (bottom sub-graph) appear to be mid-range, but please look closer at the numbers. Yes, they are at “mid-range” but you might notice that mid-range value is just shy of 80. This chart has never hit oversold status, typically 20 or lower, and the lowest value has been about 55. You may notice that the prevailing condition has been overbought, since the beginning of the indicator. Currently, I don’t see anything on this chart that indicates an aggressive sell-off, but of course that can always change with a news article, assuming that it’s not fake news, like we saw on Tuesday of this week. The trend is up, support has held so far this week and I would expect a push to new highs.
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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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