Chart of the Day - October Live Cattle
The information and opinions expressed below are based on my analysis of price behavior and chart activity
Thursday, July 10, 2025
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October Live Cattle (Daily)
October Live Cattle closed at 217.075, down .275 on the day. This week has seen contract rollover from the August, making October the “front month” now, as the Open Interest and Trade Volume has shifted. Last evening it was announced that the USDA was closing the border with Mexico again. Apparently, the New World Screwworm is making its way further north and within 3-400 miles of the US border. This follows the 1st of 5 import facilities being re-opened on Monday, with e the last scheduled for mid-September. That’s all been scrapped, as the mitigation efforts will continue and will likely be ramped up. As a result of the closure announcement, Cattle open firmer this morning and traded up to 220.625 within the first hour of trade, setting new contract highs. After that, a wave of hedge pressure and profit taking hit the market and once the prices turned red, they never really looked back. Could that be the “top” of the market? Perhaps, but I don’t think so, at this moment. To my eye, trendline resistance held and that’s the reason we saw prices get weak. If you look at the chart above, you might notice the red trendline that I’ve drawn on there. That line is drawn off of the March-May highs. You’ll see that the trendline held as resistance in June. Prices did go through that trendline by a little in June, but retraced to the 50-day moving average (green) and began another move higher at the end of the month. Today’s range was relatively wide, 5.500 from high to low, but the close was well off the lows and not glaringly bearish, I think. The short-term moving averages (blue and red, 215.020 and 211.895, respectively) are still pointing higher and may act as support. Volume was high today. Some of that may be due to rollover and some of that may be due to the market’s larger range and higher volatility today. Stochastics (bottom subgraph) did cross over and start to hook down, indication further weakness is possible. That crossover isn’t always an instant “sell signal”, as you can see by the chart. Both readings have not yet corrected under 80 and you might notice several periods on this chart where the trend stayed firm, but the Stochastics wobbled a bit. Traders that are already in a Long Futures position, may do well to hold them, as the trend and fundamentals support the bullish side. I would be a strong advocate for using a protective Sell Stop to protect that position. Perhaps near the 5-day average at 215.02, or even closer if that suits your risk tolerance. Cattle producers, or traders that have a bearish bias, may do well to consider establishing positions in September Puts, those reference the October contract, but have less time value and lower premiums. For example, the September 210.000 Puts closed at 2.750 or $1,100 before commissions/fees. I would suggest placing a GTC order to take profits at 2x what you pay for that option. (you could also use those Puts to backstop a long futures position, instead of a Sell Stop, but take care to ensure you have the position Delta correct) If the Live Cattle futures do start to retrace lower, I would expect the 50-day moving average (green, 208.855) to hold as support, much like it has over the life of this chart.
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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 211.015 and 209.703 (blue, red) respectively. We did run into trendline resistance this week and that may spur a short period of profit taking, or bearish trade, like it did in May and then again in early June. The weekly Stochastics recently hooked back into overbought territory. 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.
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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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