Live Cattle/CRB Ratio


Charted above is my phasing analysis on Live Cattle futures. It seems evident that we have put in a trough of the 18 year duration at the time of writing. I remember back in late FEB early MAR having a chat with a friend about the cycles in Live Cattle. He actually brought it forward to me as a challenge and I remember saying “Matt, we are coming into an 18 year cycle low if not already” long behold we had a significant burst higher suggesting that that interpretation is most likely the accurate interpretation. We are yet to break the 54 month FLD in order to confirm such a trough but recent price action seems promising in fulfilling such a call made back in MAR. The structure in Live Cattle is actually ideal and the substructure fits very nicely. This is one of my favorite 18 year cycle in terms of all of those that occurred in the prices of commodities and currencies since the 2001/2 lows.


Charted above is the 54 month FLD along with the price of live cattle, notice how accurately the trough in price was depicted by a peak in the FLD. I am looking for prices to continue higher since the FLD is heading lower which means that the 54 month cycle at this current point in time will work to advance prices rather than depress them hence the bullish stance we have on this particular commodity.


The chart above illustrates how beautifully the the second harmonic split this 18 year cycle into two 9 year waves. the 9 year cycle trough is almost precisely at the middle of the larger 18 year wave which is a phenomena that we usually see considering the gradual nature of variation. Unfortunately it is too soon to scale a projection line with recent price data, once we get more data I will update subscribers with a projection line.


The chart above presents my phasing analysis on the LiveCattle/CRB ratio. It seems evident that we are still yet to witness a 18 year cycle trough this suggests that live cattle is likely to under perform the CRB index as a whole and hence capital is better off allocated else where in the commodity sector rather than in the meats. Let us now take a look at the projection we have in terms of this ratio in order to discern when the meat markets are likely to ourperform the CRB and when the CRB is likely to outperform the meat markets.


The chart above presents the projection on the LiveCattle/CRB ratio. It seems evident that the Cattle market is likely to outperform going into the middle of the second quarter of 2018 after which the CRB is likely to outperform going into the a trough in 2020 which would coincide with an 18 year cycle low in terms of this ratio which should see the prices of cattle embark on a significant advance relative to the CRB that is likely to exceed most participants expectations. The chart is marked with approximate dates for subscribers’ reference. Let us see how this ratio ends up playing out.


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