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Theodore, Saskatchewan | I can share some charts and a few thoughts. Forewarning that last year I was looking for a bigger rally than what happened so I may be biased.... or perhaps just my timing is off. Luckily jpartner kept me in check.
Looking at the weekly live cattle chart we can see that it has been in a steady uptrend. Sharp corrections usually followed by a rounding out and buyers step up. It moved mostly sideways during 2012 - 2013. Which is good to recharge energy for the rally. Can be explained by the drought and high feed cost causing cattle liquidation. But as we know that in itself did not give higher prices. In fact the big buyers were very patient and waited it out, in at 120 area.
Now draw some lines on the chart to get an idea of how much energy price has and it looks like we are into some pretty high territory on this bounce. However it has a different appearance than previous highs, more like a pause. I am cautious as these large rallies do not come along every day so predicting the top is not that easy. Looks to me like we could head to 150 area and possibly 160. The line could be broken and the market can go parabolic (don't bet the farm on it but possible)
Have a look at the april chart which just had a nice pullback and tested that old high. Usually referred to as resistance becomes support is really just a retest. In this case the line is horizontal.
And feeder cattle weekly is the last chart. Took a lot of energy to get up to 170 so having a breather. It has not reached the same limits as previous highs. If live cattle keep moving this should test the 180 area.
Full disclosure, I had feb live cattle contracts bought at 132 and sold at 142. Rolled to the June contract on this pullback and bought at 131. My thought is that if April makes the highs June will follow and may actually see better gain with a little less volatility. It may not reach the same price as april. Kind of cheat with a stop around 130. Not looking at playing this rally past summer. May be the first year in a long time I will sell all my heifers.
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 1-Fullscreen capture 12022014 10208 AM.jpg (92KB - 55 downloads)
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cattle for Alberta farmer
