It was a bad week to be “bullish” on Live Cattle futures, as the most active December contract ended the week at 3-month lows. The outlook for weaker beef demand is behind the sell-off, with news that South Korea is placing a temporary block on U.S. beef imports due to finding spinal material in a shipment. In addition, the recent re-call of ground beef due to e-coli, is doing no favors in getting the consumer to eat more beef products. Ample supplies of pork and poultry are also weighing on Cattle prices, with consumers turning to cheaper competitors to beef. Now that Corn prices have started to fall from lofty levels, this may encourage producers to keep young Cattle on feedlots longer, which would result in heavier weights once they come to market.

Looking at the daily chart for December Cattle, we notice Friday’s sharp sell-off sent prices below the 100-day moving average to end the week. However, the 14-day RSI has reached moderately oversold levels, with a reading of 23.22. Friday’s release of the weekly Commitment of traders report, shows large speculators have started to liquidate their long position in Cattle, with the net-long position by large non-commercial traders falling by 3,336 contracts as of October 2nd. However, the net-long position is likely even smaller, given the sharp sell-off we saw last week. 95.25 is seen as the next support point for December Cattle, with resistance found at the 100-day moving average at 97.82. December Live Cattle closed Friday at 96.12, down 1.72.

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