March Feeder Cattle opened higher, traded to the high of the day at 248.35 and then broke down to the session low at 245.925. It consolidated the rest of the session and settled at 247.15. Futures consolidated on Friday after making a new high for the recent up move at 249.15 on Thursday. It was unable to build upon the premium over the cash index as trade took place below resistance at 248.85 and above support at 245.75. The Friday settlement however, was the highest settlement for the up move, therefore ending the week on a positive note, in my opinion. The cash index was higher on Friday as producers have been very aggressive in their pursuit of Feeder Cattle. If futures can hold settlement, it could test resistance at 248.85 and then the Thursday high. Resistance then comes in at 251.30. A failure below settlement could see support re-tested at 245.75 and then the 61.8% retracement level at 243.475. Support then comes in at 242.475.
The Feeder Cattle Index increased and is at 242.95 as of 02/08/2024.
April Live Cattle put in a potentially bearing candlestick formation. It opened lower and raced to the session high at 187.475. It just so happens that Thursday’s high was at the same level. This is called a Tweezer Top. A Tweezer Top indicates a potential topping action and could lead to a pullback in futures. Cattle, like Feeders quickly rejected the rally and broke down to the session low at 185.825. It consolidated the rest of the session and settled at 186.725. Friday’s price action was below resistance at 187.725 and above support at 185.75. Traders couldn’t get futures to move higher or take out the Thursday low as they waited for cash to trade. Cash seemed quiet during the trading session but evolved after the close as it traded higher than last week’s average (177.80) from 179.00 – 183.00 on a live basis. This could put a positive spin on futures on the open on Monday. We’ll see…. Producers were able to hold out and get packers to pay up as they needed to purchase cattle. Producers’ however, are still not faring well even at these higher prices in my opinion. Break evens are still higher though narrowing, in my opinion. If futures can hold settlement, it could re-test the 187.475 high. Resistance then comes in at 187.725. A breakout above the Tweezer Top could see a push towards resistance at 190.075. If futures fall below support at 185.75, it could pullback and test support 184.35.
Boxed beef cutouts were mixed as choice cutouts decreased 0.97 to 294.04 and select increased 0.96 to 285.08. The choice/ select spread narrowed and is at 8.96 and the load count was 105.
Friday’s estimated slaughter is 117,000, which is below last week’s 121,000 and last year’s 122,421. Saturday slaughter is expected to be 4,000, which is below last week’s 11,000 and last year’s 14,392. The estimated total for the week (so far) is 622,000, which is below last week’s 637,000 and last year’s 627,845.
The USDA report LM_Ct131 states: Thus far for Friday in the Texas Panhandle negotiated cash trade has been mostly inactive on light demand. Last week live FOB purchases traded at 178.00. In Kansas negotiated cash trade has been slow on light demand. Last week live FOB purchases traded from 178.00-179.00. In Nebraska negotiated cash trade has been slow on light to moderate demand. Compared to last week live FOB purchases traded 1.25-4.00 higher at 180.00, on a light test. Last week dressed delivered purchases traded at 280.00. In the Western Cornbelt negotiated cash trade has been slow on light to moderate demand. Compared to last week dressed delivered purchases traded 5.00 higher at 285.00, on a light test. There have been a few early live FOB purchases at 180 however not enough purchases for a market test. Last week live FOB purchases from 177.00-179.00.
The USDA is indicating cash trades for live cattle from 175.00 – 183.00 and from 280.00 – 285.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, February 13, 2024, at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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