June fats into the order blockJune fats have set up a sell and a possible push back down from the order block…
LEJ2022 trade ideas
Looking for sideways to higher before new lowsThis is a continuation of my recent first TV post a couple weeks ago. It looks even better confirmed now that the 208 area was our short to intermediate term top in cattle. There is a possibility it was THE top, if we close below our 189 wave 1 area, especially on a weekly basis for conservative confirmation. Then it'd be 2015 all over again, the likely confirmed end of the larger cattle bull cycle. My preferred take is still for new all-time highs later this year though. We were extremely overbought, the funds at record long, and technical indicators all showing us we were due for a notable top and heavy correction. Here we have been getting the hard down the last couple weeks. I feel that today's 38.2% retracement back to the 8/21/24 low at 195.50 is a good area to look for some interim strength, or at least basing. This wave 4 down is likely to be complex and longer-driven, as wave 2 was a simple zigzag and short and to the point. It's quite possible we drag this thing out until sometime in April for a seasonally weaker time frame, before making a final 5th wave up. Seasonality and some other indication points to a possible major trend change in September of this year, so that's possibly when we finally drag out the top wave 5 in? It could be quite a bit sooner though too. I still like the idea of the 220 area in the longterm, and it's still possible with EW technicals, as although wave 5 would be "longer than the norm" when wave 3 is extended (it looks to have been), wave 5 could still be 0.618 of wave 1+3 which would get you around that 220 area if we do indeed drop down to the 190 area for wave 4. It could also be shallower than that, but it's likely to be complex like a flat or triangle in here either way.
My related post:
Cattle Update: Changes in Program and Data PublicationFollowing the 2022 Census of Agriculture, changes were implemented in the cattle program. Starting January 2025, a reduced number of data items are being published for the following states: Alaska (AK), Connecticut (CT), Delaware (DE), Hawaii (HI), Indiana (IN), Louisiana (LA), Maine (ME), Maryland (MD), Massachusetts (MA), Mississippi (MS), Nevada (NV), New Hampshire (NH), New Jersey (NJ), North Carolina (NC), Rhode Island (RI), South Carolina (SC), Utah (UT), Vermont (VT), and West Virginia (WV). Despite this reduction, key estimates such as the total inventory of all cattle and calves, all cows inventory, and calf crop are still published for all states.
At the state level, data publication has been streamlined to focus on essential metrics while maintaining consistency with national totals. For instance, Texas, one of the largest cattle-producing states, saw its total cattle and calves inventory decline from 11,700,000 head in 2024 to 11,800,000 head in 2025, representing a slight increase of 1%. Meanwhile, smaller states like Delaware experienced more pronounced fluctuations, with its inventory decreasing by 4% over the same period.
In addition to these program changes, revisions to previous estimates were conducted to ensure accuracy and reliability. All inventory and calf crop estimates for July 1, 2023, and January 1, 2024, were reviewed using updated data on calf crop, official slaughter records, import and export statistics, and new survey information.
Based on this review :
• The estimate for all cows and heifers that have calved decreased by 0.3% as of July 1, 2023, and by 0.6% as of January 1, 2024.
• The 2023 calf crop estimate was revised downward by 0.1%.
State-level estimates were also reviewed, leading to reallocations of inventory figures to align with the United States total. For example, the inventory of beef cows that have calved in Nebraska was adjusted downward by 4%, while milk cow inventories in California remained relatively stable, increasing by only 1%.
Revisions are an ongoing process aimed at improving year-to-year and item-to-item relationships. Estimates for the previous year are subject to revision when current estimates are prepared, with updates primarily driven by livestock slaughter data, foreign trade figures, and additional survey results. Furthermore, estimates will be reviewed after the release of data from the five-year Census of Agriculture, after which no further revisions will be made.
The reliability of these estimates is supported by rigorous statistical methodologies. Over the past 10 years, the "Root Mean Square Error" for all cattle and calves inventory estimates has averaged 0.4%, meaning there is a 2-in-3 chance that the final estimate will not deviate from the current estimate by more than 0.4%. At the 90% confidence level, this margin increases to 0.7%. Historical data shows that changes between the first and latest estimates have averaged 234,000 head, ranging from 0 to 627,000 head.
All together, these program adjustments and revisions underscore the commitment to delivering precise and actionable insights into the cattle sector. By balancing comprehensive data collection with operational efficiency, stakeholders can make much more informed decisions regarding production planning, pricing strategies, and resource allocation. This approach ensures that users receive reliable and up-to-date information to navigate the complexities of modern agriculture.
Cattle Inventory and Classification for January 31Overview
The cattle inventory report provides a comprehensive breakdown of cattle and calf populations across the United States, categorized by class. This data is essential for understanding trends in livestock production, market dynamics, and agricultural planning.
Key Highlights
• National Inventory. As of January 1, 2025, the total inventory of all cattle and calves stood at 86,662,200 head, representing a slight decline from 87,157,400 head in 2024.
• State-Level Data. While national figures offer a broad perspective, state-level inventories provide granular insights into regional contributions to the overall cattle population.
• Classifications. Cattle are classified into various categories, including beef cows, milk cows, heifers, steers, bulls, and calves under 500 pounds. Each category reflects specific segments of the cattle industry.
Notable Changes
Beef Cows. The inventory of beef cows that have calved decreased slightly, with numbers dropping from 28,013,000 head in 2024 to 27,863,500 head in 2025.
Milk Cows. Milk cow inventories also showed minor fluctuations, reflecting shifts in dairy production levels.
Implications for the Market
Understanding cattle inventory by class helps stakeholders anticipate supply and demand dynamics. For instance, a decrease in beef cow inventories may signal tighter supplies of feeder cattle, potentially driving up prices.
Conversely, stable or increasing milk cow numbers could indicate steady or growing demand for dairy products.
The cattle inventory report serves as a critical tool for farmers, ranchers, policymakers, and investors seeking to navigate the complexities of the livestock sector.
Calf Crop Estimates
The calf crop estimates provide critical insights into the reproductive performance of the cattle industry, reflecting the number of calves born during specific periods. These estimates are vital for understanding future supply dynamics and planning for market demands. According to the latest data, the total calf crop for 2023 was reported at 33,563,000 head, with a slight decrease to 33,529,500 head in 2024.
National totals are complemented by state-level estimates, offering a more granular view of regional contributions to the overall calf crop. For instance, states like Texas and Nebraska consistently rank among the top contributors, while smaller states may show more variability year over year. The report also breaks down calf crop figures into six-month periods, allowing for a more detailed analysis of seasonal trends.
Revisions to previous estimates have been made based on updated slaughter, import, and export data, ensuring greater accuracy. For example, the 2023 calf crop estimate was revised downward by 0.1 percent following a comprehensive review. Such adjustments help refine projections and improve the reliability of future forecasts.
Understanding calf crop trends is essential for stakeholders across the livestock sector, from ranchers planning breeding cycles to traders evaluating market conditions.
What Disinflation - Beef Price Went Up 64 percent in 5 YearsCME: Live Cattle ( CME:LE1! ), Lean Hog ( CME:HE1! )
Last month, the Bureau of Labor Statistics (BLS) reported that US inflation on food items was 5.7% in June, exactly half of its peak of 11.4% in August 2022. Food inflation is at its lowest level since November 2021.
Under the sub-category “Meats, poultry, fish, and eggs” from Food-at-home, the BLS data shows a negative 0.2%, meaning that meat prices declined in the past year.
The official data contradicts my own experience. Anyone who has been shopping knows that the grocery bill gets bigger every month. Last weekend, I surveyed the Beef section at a local Walmart and found the following:
• Beef cuts with the USDA Choice label price between $12-$18 per pound.
• A primal loin, for example, costs $16.99/lb.
Next to Beef is the Pork section.
• A full slack of spareribs prices at $1.89/lb.
• This is back to the pre-Covid price level.
Why is beef so pricy? Will consumers get some relief as food inflation goes down? In this report, I attempt to find out what drives the beef/cattle price up.
The Cash Cattle Market
According to the National Daily Cattle & Beef Summary published by the USDA, Choice Beef averaged $301.79/cwt (per 100 pounds) nationwide on August 4th. Primal loin cutouts averaged $4.11/lb. This is so much lower than the retail price. But why?
The USDA reports transactions occurred at meatpackers, where cattle farmers sell their beef cows. The report shows the value chain throughout the packing process:
• Live Cattle: Steer (male cow), 187.55/cwt; Heifer (young female), $187.26/cwt;
• Beef Carcass: $284.86 (Choice);
• Primal Flank: $214.84 (Choice);
• Primal Rib: $457.54 (Choice);
• It also lists prices for Chuck, Round, Brisket, Short Plate, Trimmings, etc.
From the packing plant, beef goes through cold storage, wholesale, and retail distribution before consumers pick up their favorite meat at the grocery store.
During the inflationary period, labor and energy become more costly, driving up the cost of each stage of processing and distribution. Higher interest rates also raise the cost of business overhead. These together widen the price spread between live cattle and retail beef cutout significantly.
In the beef cattle value chain, it takes farmers two years to raise the cows, while processing and distribution take maybe two weeks to complete. However, farmers receive only about 20% of the final sales price.
The Cattle Cycle and A Shrinking Herd
Cattle cycle is the process in which the size of the national cattle herd changes over time, from low point to low point. The cattle cycle averages 8–12 years and is influenced by the cattle prices, input costs that drive producer profitability, the gestation period, the time needed for raising calves to market weight, and climate conditions.
If cattle prices and producer profits are expected to rise, producers may expand their herds; if prices are expected to decline, producers will reduce their herds by culling older cows and keeping fewer heifers to replace older cows.
Cow-calf producers’ response to price fluctuations may be delayed because of the lengthy gestation period for cattle relative to hogs and poultry. The total number of beef cattle in the United States is highly dependent on the stage in the cattle cycle.
Last month, the USDA reported that the latest herd inventory for all cows and calves was 95.9 million, down 3% year-over-year. Beef cow inventory was 29.4 million, also down 3%. The decline in beef cow supply is the main driver for higher beef prices.
Over the past 50 years, the US cattle herd has shrunk significantly.
• Inventory for all cows and calves peaked at 132 million in 1975. We have lost over 36 million cows or 27% of all cattle supply.
• Beef cattle inventory peaked at 45.7 million. We now have 2/3 of peak herd size.
A counter argument is that, with technology advancements, we need fewer cows for the same amount of beef supply. The production time gets shorter, and the cows gets bigger. People now have healthier diets and take in less red meat.
According to USDA data, per capita beef consumption was 63.3 pounds in 1960. It declined to 59.1 pounds in 2021, down 6.6%. But look at the huge population growth for people. The US had 203.2 million people according to the 1970 Census. US population grew to 331.4 million in the 2020 Census, up 63%. Beef demand clearly outpaced supply as US population grows.
Beef Export and Import
Interestingly, the US both exports and imports beef. In 2021, the US exported 3.43 billion pounds of beef while imported 3.35 billion pounds. Beef export was mainly higher-grade beef cutouts. And import was lower-grade beef for processing into ground beef.
The US used to be a net import country for beef. In 2020, China signed a trade agreement with the US and opened its vast market for US beef import. This resulted in China buying four times as much beef the following year.
More export reduces domestic beef supply. This is another factor driving up beef prices.
In conclusion, the days of lower priced beef are long gone. Beef prices are expected to remain high, even though food inflation goes down.
Cattle and Hog Spread Trade – A Revisit
How could we make use of this analysis? On May 15th, I published an idea about a spread trade between CME Live Cattle Futures ( NASDAQ:LE ) and Lean Hog Futures ( NYSE:HE ).
The 20-year chart shows that the price spread between live cattle (LE) and lean hog (HE) broadly stays in the range of $20-$60 per 100 pounds but could go up to as high as $100.
On May 12th, October cattle contract (LEV3) was quoted $166.2 per 100 lbs., while October hog contract (HEV3) priced at $77.425. Thus, the price spread was $88.775.
On August 4th, LEV3 settled at $183.10 while HEV3 was closed at $83.25. The spread has widened to nearly $100.
The Impact of Proposition 12
In 2018, California passed an animal welfare law called Proposition 12. It requires that breeding pigs be confined to a pen with no less than 24 square feet of floor space, allowing them to fully turn around in their living area.
Proposition 12 applies to not only hog farmers in California, but also any supplier selling hog and pork in the state of California. The hog industry fought hard but lost. The Supreme Court upheld the law in May, and it is finally taking effect in July.
The animal welfare law significantly increases the cost of hog production nationwide. Prices of live hog, pork cutout, ham and bacon shall all go up. However, as we are now in summer, a low pork consumption season, cash market price has not yet caught up.
In my opinion, the cost factor pushing pork prices up in the short run is greater than the supply-demand force that drives up beef prices in the long run. There may be room to short the cattle-hog spread, until pork prices stabilize in a new equilibrium.
A Short Spread trade entails selling 1 CME Live Cattle Futures and buying 1 CME Lean Hog Futures. Both contracts are based on 40,000 pounds of meat and require $1,600 in initial margins.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Overdue for a strong correction before higher yet?Here is my current view of LC. Like many others, I never thought it would get this high in the first place. But following and adapting with this runaway longwinded bull, the funds are very long and as they unwind (it already looks to have started), it's gonna be a sharp downward move. There's good support and technical retracement down around the 190 region, but panic and momentum and long liquidation turning to even shorts could get thing uglier yet. I currently expect to eventually shoot back to new highs, perhaps targeting 220 region.
Beef Prices Soar: A Global Trend Beyond BrazilBeef prices are hitting historic highs across the globe, not just in Brazil, as many tend to believe. The surge isn’t isolated to meat alone; rice, chicken, and olive oil prices are following a similar upward trajectory. This global trend highlights an important point: political factors have minimal influence on price movements in this context. Instead, it’s driven by a complex mix of supply chain disruptions, increased demand, and other economic factors. Understanding these dynamics is crucial. Relying on political narratives to explain price changes is misleading. Stay informed, make data-driven decisions, and don’t fall into political traps that distract from the real issues at hand. Knowledge is your most powerful tool in navigating these challenging times.
Is Cattle Setting A Bear Flag?Live Cattle
Technicals (October - V)
October live cattle futures continued to trade in a choppy manner but did tack on some gains at the close. Fear in the outside markets has subsided some which has calmed the nerves some. First resistance for today's trade comes in from 180.575-181.175. If the Bulls can chew through that pocket a retest of the 50% retracement (the midpoint of the recent high to low) could be in order, that comes in at 182.675. We continue to be in the camp that relief rallies are likely to be viewed as selling opportunities, particularly in the back months and for those who need to protect/hedge the physical. On the support side of things,
Resistance: 180.575-181.175***, 182.675-183.275****
Pivot: 179.35-180.50
Support: 176.35-176.22***
Weekly Export Sales
Beef: Net sales of 10,000 MT for 2024 were down 43 percent from the previous week and 27 percent from the prior 4-week average.
Daily Livestock Summary
Yesterday's cutout values were softer with choice cuts down 1.96 to 313.85 and select cuts down .79 to 298.83. The 5-area average price for live steers was reported at 192.67. Daily slaughter came in at 122k head, in line with last week and last year. Week to date slaughter stands at 363k head.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Buy The Dip in Live Cattle? Cattle futures have gotten hit hard over the last few weeks as headline risk coupled with bearish seasonal tendencies have led to long liquidation from Funds.
The selling pressure accelerated on March 26th as headlines of Avian flue spreading to (dairy) cattle in Texas and Kansas swept across all the different agricultural news wires and raised concerns of further spread. This news comes on what is a seasonally weaker time of year for the cattle markets. Looking at the markets in the week prior to the March 26th headline it seemed as though the market was starting to stall as it was as Funds may have been looking to reduce exposure ahead of the seasonal weakness, the headlines were perhaps the catalyst that sparked the proverbial rush for the exits.
Looking at the weekly Commitment of Traders report we see that Funds came into the year with a net long position of 17,415 contracts. The smallest net long position of the year was 12,993 on 1/16/24. After that, it was 8 consecutive weeks of buying which propelled funds to a net long of 63,311 contracts. The most recent report shows funds net long 53,281. Historically (not guaranteed) we’ve see the seasonal weakness start to subside in the last week of April. If weakness persists up to that point and fundamentals (the cash cattle trade) can remain somewhat firm, it may represent a good opportunity to the long side.
So, what does it mean to us? Well, the chart and seasonals favor the Bears right now, but this will be on our radar for a potential trend reversal in the coming weeks, ideally from lower price levels.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Explosion in the price of live cattleThis commodity has been trending since 2020, and recently made a new high just after a moderate pullback.
It is going up in a straight line, currently hovering around resistance/support, the MA100 started pointing up and the price made a bullish pattern.
The target for such a pattern is approximately the size of the pole which brings us to about 210.
With cattle there are no Elliott Waves it just does whatever it wants.
Because it is trending so strongly the risk to reward is something ridiculous.
And it could certaintly keep going up and up and up.
If you look at the all time chart you will notice LE has not trended like this ever. Something is going on. Bubble time.
The latest CME article is 6 months old, they talk about a contraction in the US cattle market (which is part of the cattle cycle theory which is more than 2 century old).
www.cmegroup.com
The US cattle inventory is the smallest in 73 years, that plus inflation means the price logically should be the highest ever.
People are addicted to macdonald's and are not going to give up their burgers, the Biden adminitration is going to have to do something I don't care what as long as it makes me money.
www.fb.org
Watch up expiry is in a few days, it might be a good idea to wait, also we are a bit early in the triangle pattern (but it feels like it could mega-break anytime).
If you trade this make sure to use guaranteed stop or another good form of risk management, it often gaps alot.
With a certain broker that has guaranteed stop the minimum risk you can take is $400 so this is not for everyone, depends on your broker.
I believe this is absolutely worth taking a 1% risk, and adding to it if it becomes a big winner.
Correction For April Live Cattle Futures? Technical Outlook:
Live Cattle futures have enjoyed a tremendous rally over the last 3 weeks - up nearly $10 since just the beginning of February. But is the rally showing fatigue? Prices are beginning to stall out near the 61.8% retracement of the all-time-highs in October to the lows in late December. Moreover, momentum signatures are slowing - showing considerable bearish divergence on the standard 14-day RSI in conjunction with a declining volume profile. All of these factors are evidence that all of the bulls are already in the market. In other words, long liquidation and profit capture could send the April Live Cattle contract lower pretty rapidly. Outside markets, like the stock indexes, will likely play a factor in how a correction will play out. On Tuesday, we saw live cattle prices gap lower at the open after the major stock indices sold-off amidst a hotter-than-expected CPI number. Further weakness in equities will paint a dreary outlook for beef demand, and add additional price pressure on the live cattle contracts.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Could the premium get even beefier?
In a previous article, "A Beefy Premium" , we delved into the growing divergence between Live Cattle and Lean Hogs. Since then, this disparity has only broadened.
Currently, we're seeing a historic peak in both the absolute price difference (Live Cattle – Lean Hog) and the price ratio (Live Cattle/Lean Hog). To comprehend the drivers of this divergence, we need to explore the fundamentals of each sector.
Beef:
USDA economists, Russell Knight and Hannah Taylor, have noted that the repercussions of drought are still impacting calf production. The twin challenges of poor pastures and dwindling hay supplies have made it difficult for farmers to sustain their breeding stock. This has prompted a surge in beef cow culling. With anticipated feed price reductions on the horizon, we predict a tilt towards placing more calves into feedlots in 2024, constricting the cattle supply even further.
Interestingly, despite the tightening cattle supply, demand remains robust. Beef cutout prices reached a pinnacle in October, with prices generally maintaining historic highs on a monthly scale. Seasonally, prices are also expected to rise slightly going into November due to a holiday boost.
A possible explanation for this sustained demand might be the surge in US wages. Empowered with heftier paychecks, consumers are more able to splurge on beef, ensuring packers to keep up their slaughter pace.
Pork:
On the hog front, this quarter reflects a modest uptick in inventory. In contrast to the cattle market, the decline in headcounts here isn’t as pronounced.
A noteworthy correlation emerges between lean hogs and soybean meal. With soybean meal being a staple in animal feed production, its price directly influences producer margins. Factors like the Russia-Ukraine conflict, US droughts, and surging demand for soybean meal have propelled its prices in recent years. Even though the current prices are tapering off, the Soybean Meal/Lean Hogs ratio remains high, signaling shrinking profit margins for producers. Moreover, compared to other commodities, the USDA's support for the Hogs and Pigs market has been relatively scant.
Another point of concern is the prevalence of negative news in the swine industry, such as the European swine industry suffering substantial financial losses in 2023, leading to an 8.5% drop in production. Or bouts of African Swine Fever, threatening global supplies. Such events have the potential to threaten producer’s profitability significantly which could work its way into structural long-term decline in supply. But as of now, this remains to be seen.
Overall:
Current evidence seems to be pointing to a stronger preference for beef given the unwavering demand despite supply shortage and climbing prices. Basic economics principlesnudge producers to markets with higher profitability, which could work its way into an increase in participants leading to supply eventually matching demand. Although this movement, if it happens, does not occur overnight, it will eventually lead to a convergence in prices between the two markets in the future.
There are also other reasons that need not be as drastic that point towards a convergence in prices in the medium term: expectations of Live Cattle supply should improve next year; the road to the maximum willingness to pay for Live Cattle is shorter now.
Hence, to express our continued bearish bias, we could consider a short on the spread of live cattle to lean hogs. Given that both Lean Hog & Live Cattle Futures have the same contract unit of 40,000 pounds and price quotation of US cents per pound, we can trade the spread of the two contracts using a 1:1 ratio. This involves selling one live cattle futures contract at the current price of 185.725 and buying one lean hog futures contract at the current price of 68.025 giving us a spread of 117.7. Each 0.00025 increment is equal to 10$.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Reference:
usda.library.cornell.edu
usda.library.cornell.edu
beef2live.com
www.cmegroup.com
www.cmegroup.com
Beef Is Looking Toppy...Rising wedge. 60% of these break down. Confluently, the monthly stochastic RSI is topping and the monthly RSI is screaming overbought. I expect a possible and highly probable drawdown of 7-13% over the next 6-9 months. Nothing is for certain, however, so please exercise sound risk management.
Limbo in December Live Cattle December Live Cattle has been in a virtual free-fall since making contract highs back on September 19th. We’ve sold off nearly $7 since scoring the new high. To say it’s been a remarkable year for live cattle futures would be an understatement - we’ve made all time highs, and bucked bearish seasonal tendencies along the way. The strength observed across the cattle contracts is well substantiated by national cash-trade transactions, and cattle on feed numbers - two of the most important components of fundamental analysis in the cattle markets.
Where will we find support?
If you look at the retracement from the contract’s low to the contract’s high, we are quickly approaching the 23.6% retracement level at 183.100. This could be viewed as our first major pocket of support, as it is both a significant fibonacci retracement level, but also a point where we saw prices pace through continuously between July and September.
Trendline Support
In the case that the 23.6% retracement does not hold, another key area to consider is long-held trendline support. Now, that could be a ways away from where we’re at. If price continues to free-fall, trendline support should come into play around 181. But, if prices stabilize and begin moving sideways over the course of the coming weeks, both trendline support and the 23.6% retracement level will converge. This convergence serves a “cluster” of evidence that provides more credibility to the support pocket.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
A third of my whole portfolio is in this short - NFALive Cattle Futures is probably an asset that you have never looked at and never thought to trade.
However, it has been in it's own bull market for the past 3 years !
Having said that, now the chart is showing clear weakness and giving us the perfect entry to the trade with an incredibly low risk and high potential reward. Hitting the first tp would keep it in it's bull run and give it the much needed pullback it needs, hence I feel that it is a great opportunity.
As it is an incredibly bullish asset, I am taking 50% profit at the first tp, then 25% on the 2nd and 25% on the 3rd.
