AgResource Daily Cattle Analysis: Cattle and feeder cattle futures were mostly higher on Tuesday, and a firm outlook is offered for early trade today. October live cattle finished just below unchanged, but December marked the 2nd day above all of the major moving averages. Cash markets were quiet through Tuesday, and trade will likely hold until later in the week.
Feeder cattle futures were similarly weaker in the nearby, while October marked the best close since early August. The cash feeder index was up $.52 at $244.02. The USDA’s quarterly feeder cattle price forecasts were lowered in all quarters in the September estimates. However, the USDA maintains price forecasts that are still above current CME futures prices. The Q4 forecast of $255 is still $9-12 above the CME, while the Q1 forecast of $248 is $10-12 higher than futures. The largest difference is in the Q2 outlook, where the USDA forecasts an average price of $254, while the CME is pricing feeder cattle $15-16 cheaper. AgResource estimates Sep 1 feeder cattle inventories down 4% from a year ago and record low, which keeps price risk to the upside at current levels.
Nearby cattle futures closed a weekly chart gap last week, and the next technical target is the August expiration near $186.
