Feeder Cattle Price May Fall on 40-Day Moving Average: Technical Analysis

Feeder-cattle futures may extend a four-session slide if the market closes below the 40-day moving average, said Chad Henderson of Prime Agricultural Consultants Inc.

September feeder cattle, the contract closest to expiration, may drop to $1.12 a pound should futures close below the widely followed technical level of support, said Henderson, a market analyst in Brookfield, Wisconsin. Rising corn prices also are bearish for feeder cattle, because higher feed costs may discourage herd expansion, he said.

September futures dropped 0.15 cent to $1.1395 a pound at 9:58 a.m. on the Chicago Mercantile Exchange, below the 40-day moving average of about $1.141. The contract slipped 2.2 percent in the previous three sessions. The last time the price closed below $1.12 was Aug. 13.

“Feeder cattle are right at key support,” Henderson said in a telephone interview. “That market, from a technical level, is looking for a quick trade down to $1.12.”

Feeder cattle are young animals that weigh 500 pounds (227 kilograms) to 800 pounds. They are fattened in feedlots on corn until they weigh about 1,200 pounds, and then sold to meatpackers.

Corn futures for December delivery, the most-active contract, climbed as high as $4.4725 a bushel today on the Chicago Board of Trade, the highest level since June 2009.

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.

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