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Cattle at Crossroads After Bullish Week

March 22, 2013 at 19:45 by Andriy Moraru

Even though the week is ending with a growth for live cattle futures, the commodity remains inside a strong bearish wave. Declining inventories reported by USDA point at a possible unfolding of a bullish tendency, but demand is expected to continue falling.

The National Agricultural Statistics Service of the United States Department of Agriculture has released its monthly Cattle on Feed report for March, showing the third monthly decline of inventories in a row. According to this report, cattle on feed designated for United States market totaled 10.9 million head as of March 1 (only feedlots with capacity of 1,000 or more head). Meanwhile, demand from the food processors decreased this week.

The technical factors could be pointing at a probable turn in the downward movement of cattle price — it has bounced off the April 2012 low this week. Though the signal is far from being a strong one as this week’s gain looks moderate compared to the two weekly candles starting March 4 and March 11. The current week fits the bearish trend, demonstrating both lower low and lower high.

Today’s trading went from $1.2605 to $1.2620 per pound for the April 2013 live cattle futures on CME. Weekly gain was about 0.4 percent for the futures. It lost more than 7% this year.

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