IFC Markets - Analytics

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    Technical Analysis #C-FCATTLE : 2016-05-06

    USDA report may support beef prices

    USDA released its monthly report on US meat market for March. Beef imports fell considerably while exports rose slightly. Will the cattle meat become dearer at the US exchanges?

    Export of US beef to its major consumers – Japan, Mexico, South Korea, Hong Kong and Canada – rose in March 0.9% since 2015 to 186.9mln pounds. Meanwhile, beef imports to US slumped 15.8% to 273.8mln pounds. This may lead to beef deficit and push its prices up. The arrivals from Australia and New Zealand fell in recent 12 months while the US beef sales rose mainly in Japan and South Korea. In a week to April 28 cattle meat exports from US to Japan rose to 15.6 thousand tonnes from 12.1 thousand tonnes previous week. USDA is to release its next monthly agricultural report on May 10 which may affect the beef and other agricultural futures prices.

     

    FCattle

    On the daily chart FCattle: D1 has hit a fresh 3-year low, left the downtrend and is correcting upwards. The MACD and Parabolic indicators have formed the signals to buy. RSI has formed positive divergence and is above 50. The Bollinger bands have contracted slightly which means lower volatility. The bullish momentum may develop in case the beef prices surpass the last fractal high at 146.8. This level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal and the last fractal low being the 3-year low at 138.5. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 138.5 without reaching the order at 146.8, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

     

    Position Buy
    Buy stop above 146.8
    Stop loss below 138.5

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