Key reversal occurs in live cattle
- amy55735
- May 20
- 1 min read
On Monday, May 12, June live cattle futures gapped higher and posted a fresh contract high, but they also took out the all-time high price established last month in the expired April contract. The following session on Tuesday was an inside day with a slightly lower close. Then, Wednesday, May 14, live cattle futures staged a massive key reversal in every contract. Futures shot higher early in the session, taking out Monday’s highs before collapsing into a heap, finishing sharply lower.
This occurred on huge volume, the sixth-highest-volume session in the history of the live cattle futures market. Fresh contract highs, lower close and below the previous session low on high volume meets the textbook definition of key reversal. Futures followed through to the downside on Thursday before consolidating and recovering slightly on Friday to finish the historic trading week.
The cash steer market, however, did not waver. Cash traded on Thursday mostly steady to slightly higher in the north. Odds are high that cash would have been higher last week had the reversal action not taken place. Wholesale beef was higher last week, with Choice gaining $6.52. So, with the average cash steer price slightly higher and beef up more than $6.00, packer processing margins improved slightly. However, margins remain deeply in the red, with packers losing millions of dollars processing cattle into beef each week.
Dennis Smith
May 19, 2025
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