DTN Cattle Six Factors

TREND: The trend in February live cattle is steady.

NONCOMMERCIAL OUTLOOK: Noncommercial traders held a net-long futures position of 78,187 contracts in live cattle for the week ending Dec. 30 as traders continued to be keenly aware of the market’s long-term bullish outlook, all while understanding the level of risk and volatility that’s embedded at the market at these prices points.

COMMERCIAL OUTLOOK: On the futures board, commercials remain moderately short in live cattle as of Dec. 30, likely hedged positions. Again, last week fed cash cattle prices crept higher against packers’ desire as they need more supply moving into the first quarter when fed cattle supplies are knowingly going to be thin.   

SEASONAL INDEX: Cash cattle prices tend to peak in March and bottom in October.

PRICE PROBABILITY: The most active futures contract (February) rose 5 points to the 91st percentile as traders pushed prices higher through the week.

VOLATILITY: The three-month price volatility for February live cattle remained steady at 7% as traders recognize the technical vulnerability in the market but are still acknowledging the market’s positive fundamental outlook from a long-term perspective.