Commercial traders in the August feeder cattle futures have built up a near record short position ahead of this contract's typical seasonal weakness. When we combine these factors with the technical picture on the chart below, you'll see why we've already initiated short positions in this market.
Feeders have followed the Live Cattle trade for quite some time, but when Live Cattle turned their weekly trends down just over a week ago, Feeders were reluctant to follow and did not turn their weekly trends down.
Cash trade came in sharply lower this week, but trying to pinpoint where the bulk of the trade took place has been a little difficult. Trade was reported between $126 to $132 which was down from the $137 trade reported the previous week.
Feeders have continued to follow the Live Cattle price and what seems a little odd is that the Cash cattle trade continues to trade at a substantial premium to futures, but Cash feeders have remains discount to futures prices for the most part.
Cash came in steady this week at $132 on cattle traded so far. Futures prices have been trading inside a tight trading range for almost four weeks. Prices traded back and forth last week ending the week on a weak close.