Beef Basis

Price Forecasting, Analytics, and Risk Management Tools for Beef Producers

[Brett Crosby @mbacowboy]

Optimistic me wants to call the last few sessions for May feeders a bull flag, or just a breather.

Fundamentally, I expect a new high before expiration. Technically, the recent rally could resume, but failing to fill the gap is a warning sign.
@BarchartAg @Barchart #cmdtyView

[Brett Crosby @mbacowboy]

May feeders caught a ride this week, and closed well above downtrend resistance. If the contract follows the last summer's trend, this could be the beginning of a run toward October's high. A selloff to $330 is possible, but unlikely.
@barchartag @barchart #cmdtyView

[Brett Crosby @mbacowboy]

May feeder cattle bounced off of a 38% retracement of the Nov-Feb rally, and look to close higher.

Another day higher is likely, but technical targets between $342-$346.50 may offer stiff resistance. First indication of turning the corner is $347, followed by $356.60ish.

[Brett Crosby @mbacowboy]

May feeders feel like they have more downside. The contract held support yesterday, but volume was mediocre and open interest declined. A 38%-50% retracement of the Oct-Feb rally is a likely target for sellers. Bouncing from there, a test of Oct highs is still possible.

[Brett Crosby @mbacowboy]

Tough cattle week, with feeders breaking out of the Jan-Feb range, suggesting a 40%-50% retracement of the Nov-Jan rally. Of course, I saw the signs and ignored them, hoping the range would hold.

Limited support at $342 May, but mid $320's to Mid $330's are more likely.

[Brett Crosby @mbacowboy]

This is a good question. Technical analysis (i.e. charts, etc.) is voodoo to some, gospel to others. I view technical analysis as a short-term forecasting tool which combines past market behavior with self-fulfilling prophecies.

Areas where markets have consolidated, shown reluctance to breach, etc., suggest support and resistance. Consistent market movements before profit-taking and retracement indicate possible future targets. This is all past market behavior.

Possible self-fulfilling prophecies include Fibonacci retracements, wave theories, and a host of other market theories too numerous to mention. While possibly voodoo, markets tend to reach for forecasts based on these theories, so they shouldn't be ignored.

Ultimately, I look at a chart, then use past trading behavior, possible market theory targets, and my own gut to make a call. Never discount your gut - it may be reminding you of something you've observed without consciously realizing it.

[Brett Crosby @mbacowboy]

Today's reversal in feeder cattle may lead to further selling, with May pointing $2-$5 lower in the next few sessions.

I still believe May tops its October high, but cattle on wheat pasture are 110% of last year, so a correction in feeder cattle beforehand is plausible.

[Brett Crosby @mbacowboy]

May feeder cattle have traded in a low-volume, $10 range since the first of the year. Closing above $360 or below $350 sets up an $8-$10 move beyond the range.

I expect to see highs test or break '25's high, but time will tell.

[Logan Pribbeno ✌️ @Nebraskero]

A few pot-loads of our 3-year-old February bred cows broke into the 5-handle territory

👀🤠🤷‍♂️💰

[Brett Crosby @mbacowboy]

After an explosive two weeks, cattle were due for a breather. Jan tested and failed a 50% retracement of the October-November selloff.

I am optimistic that the rally resumes, but the contract most likely prints a $32* handle first, with major support between $320-$325.

[Brett Crosby @mbacowboy]

This is the third year in a row cattle have seen a significant pullback in Q3/Q4. I expect a rebound as in the past two years, but not before Jan feeders, which are trading in a well-defined downward-trending channel, reach for support levels at $290-$300.

[Brett Crosby @mbacowboy]

Financial markets suggest a higher open in cattle. Today will begin to reveal how much money has exited the cattle complex for reasons other than a short-term sideline.

[Brett Crosby @mbacowboy]

Markets this morning went back and forth like a bride picking out a wedding dress.

I expected the May feeder cattle chart to have more gaps than the smiles at an inbreeders' convention. I lightened shorts though, after today's early $10 swing closed gaps created at the open.

[Brett Crosby @mbacowboy]

2023 and 2024 Nov. feeder cattle contracts each dropped dramatically from their highs. The '23 drop, precipitated by broader market concerns, was nearly $40. The '24 contract high to low was nearly $50. In that context, Nov. '25 has another $20-$35 to go before hitting bottom.

[Brett Crosby @mbacowboy]

May feeders' last three rallies each lasted around $22, followed by 30%-60% corrections. Now, $23+ above the Feb low, a May contract correction is due if the pattern holds. Prior swing highs have held previous corrections. Support is thus $277, then $271 on a deeper pullback.

On a cautionary note, this month's rally has surprised me, and I expected $277 to be the top for this spring. This move may therefore be the start of another bull cycle, taking August to $300+, and rendering prior patterns inconsequential.

I'm more inclined to believe this move sets the spring high, but I wouldn't hedge here without some type of margin protection.

[Brett Crosby @mbacowboy]

I was hoping May feeders would reach $269-$271, but this may be all we get for a while. Breaking below $261.50, next support level is $254-$258. I'm positioning for that area and adding at $269+ if the contract tops yesterday's $268.05 high.

[Brett Crosby @mbacowboy]

Jan Feeders appear to be forming a new leg up. If the trend from the '24 low continues, look for $270+, and possibly a new contract high. The Index will now start driving the price more than technical factors, so feedlot inventory, cattle availability, and cash flow will be key.

[Brett Crosby @mbacowboy]

Feeder cattle have broken out of a 6-week range, and appear headed for the summer trading range. I believe $253 is highly likely, with $256 absolutely attainable. Another leg equal to the Sep-October run takes the contract to the gap at $265 from March, which isn't impossible.

[Brett Crosby @mbacowboy]

After gaping lower yesterday, January feeders have resumed their selloff. Support starts at $239.82, but the contract has potential to see $235-$236. I'd be surprised to see the fall lows revisited.

[Brett Crosby @mbacowboy]

I'm inclined to believe the feeder cattle index has yet to top out.

Feeder cattle supplies will not bottom until heifer retention starts, which appears yet to happen. The October report will tell the tale.