11-03-2011: February Live Cattle: Animal Cruelty Finally Gets Attention of Congress
Stinking Indonesians are the WORST when it comes to animal cruelty. Those buggers were so bad, Australia to its credit would even take a financial hit in preference to shipping any more cattle to its largest customer. But the U.S. Government has also restricted imports of live cattle from Australia because it in turn has shipped to Indonesa in the past and also because Australia itself is guilty of inhumane practices. We have only praise for "the caucus" and the other groups in world governments that are FINALLY supporting animal rights after years of pressuring from big business interests that could care less about such subjects.
We fed into the neural network to get the following result:
February Live Cattle:
February Live Cattle:
In the cattle trade five major marketing areas, Texas/Oklahoma/New Mexico, Kansas, Nebraska, Colorado, and Iowa/Minnesota; trading and demand have been light. Prices are $2 lower in the Texas panhandle and $1 lower in Kansas. However, it is believed beef and hog supplies are tightening. Outside market forces such as Greece sovreign debt default have little influence on the cattle market. After a severe drought this year, supplies should keep tightening into next year. Cash cattle markets may tighten more quickly than investors expect because federal data for U.S. cow herds include less information about small cattle producers who had less ability to hang onto their herds as drought conditions deepened. Competing pork producers are barely able to keep pace with expanding U.S. hog herds, so hog futures are enjoying a historic surge. Animals arriving at feedlots have smaller than normal weights. The USDA showed a 4.9% rise in live cattle ready for slaughter, 11.3 million head in the feedlot population as of October 1st. Cattle arriving at feedlots showed a marginal rise rather than the 3.5% year to year drop as some traders forecast. Most analysts view a lingering result of the U.S. South drought to still play an effect in lower cattle prices for the near future. The lower weights are working counter to the effect, however. Lightweight animals weighing under 600 pounds represent 28% of placements versus a normal 20% in other years. To its credit, the U.S. Government has protected animal rights by restricting imports of cattle from Australia and Indonesia where the animals were mistreated by improper use of stunning. Exporters from these countries fell far below world standards in treatment of animals, but are evidently making efforts to conform to better standards in order not to lose their customers. The trade was shut down for a month while the U.S. Congress debated exactly how to apply standards over strong objections from foreign ministers. Labor and business banned together to pressure Congress to water down animal rights protection issues to their very great discredit. Exports to Japan are way up after their beef industry was crippled after the March earthquake there. The Japanese are close to easing age restrictions on U.S. imported beef, originally put in place because of fears of BSE (mad cow) infestation. Holiday bookings in anticipation of Thanksgiving have pretty much run their course for this year. Weak corn futures tend to favor retention of cattle longer and higher beef prices. However, there is great bullish fever in cattle traders after a recent limit up move, and pressure from the futures market to avoid missing the next trading range leg up. We see this as temporary and believe the dominating factor will continue to be the recent southern U.S. drought which is still having an impact on increased supply of animals brought to market early.
155.0I T 11/ 1
I CME - Feb-12 Live Cattle, 40000 lbs., c/lb. Cm.=0.08 Lim.= 2.0
I
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150.0IX_______XO_______________________________________________________________
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145.0I_OX___X_XO_______________________________________________________________
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140.0I___OXO___O_______________________________________________________________
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135.0I___OX____O_______________________________________________________________
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130.0I_________O_______________________________________________________________
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125.0I_________O______________________X_X_XO______X____________________________
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120.0I_________OXO____________________XO_O_OXOXOXOX____________________________
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115.0I_________OXO__X_______________XOX____OX__________________________________
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110.0I___________OXOXOX_________XOXOX______O___________________________________
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105.0I_____________OX__OXOXOXO__X__OX__________________________________________
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100.0I_______________________O_OX______________________________________________
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95.0I----I----I----I----I----I----I----I----I----I----I----I----I----I----I---
11111 111 1 1
1113455666011221222334680123457901233467889990
0030012013212010012022212122010212112001110222
2903793930924218974607911123748220665894188288
The above point-and-figure chart is giving a conventional buy signal.
We are headed toward a cyclical high and a seasonal up period.
Our best-performing internal program is "Zondr." It is giving a sell signal.
Results of "Zondr" for Live Cattle (blue lines = successful trades, red, unsuccessful): (Always in the market.)
Our third system is working on a very long term sell signal. (Note, disregard the year on the chart. Our regular readers know this is not a Y2K-compliant system, but it still works.)
The point value is $400. Initial margin on a single contract is $1,620. Use of options is advised.
Scale trade sellers are entering the market for the long term in this price range.
In the chart below, the yellow line is the futures price, read on the right axis. All other colors are read on the left axis. Blue is small speculators. Red is large speculators. Green is commercials. Large speculators with the best track record are getting increasingly-long.
The average volatility shown below suggests that a major change in direction to down is imminent at a volatility low point.
Our option trade recommendation is to Sell the Live Cattle February 127 Call @ 3. 375 or better.
What the Feb. - Jun. calendar spread suggests to us is that buying the near contract and selling the far one is at most times not profitable, which we think is a sign that these futures may go down. The best time to enter or leave the above spread is when it is at 0.00 or narrower buying the far as prices are falling and then selling the near, and exiting or entering when it is at -3.80 or wider sellling the far as prices are rising and then buying the near.
Here's an intraday chart for the previous day ( 11/01 ).
Risk Versus Opportunity Report
________________________________
LCG2 February Live Cattle
High Price: 127
Current Price: 124.2
Low Price: 118.5
Risk: -0.046
Opportunity: -0.093
(O/R) Ratio = 2.036
| Factors | Weighted Points |
|---|---|
| Inter-Market Analysis | - 1 |
| Parabolic Chart | - 1 |
| Nirvana Chart | + 1 |
| News | - 1 |
| Point & Figure | - 1 |
| Cyclicals | + 1 |
| Seasonals | + 1 |
| Internal System 1 | - 1 |
| Internal System 2 | 0 |
| Third System | - 1 |
| Historic Range | - 1 |
| Commitment of Traders | + 1 |
| Range/Volatility | - 1 |
| Level Table | + 1 |
| Other Factors | + 1 |
| Total | - 2 |
Place 9 February Live Cattle on a Sell Watch with stoploss @ +3.875 above the get-in point._____________________________________________________________________________________________________________________________M.T.
