Walsh Trading Daily Insights
Commentary
January Feeder Cattle made a new high for the recent up move, trading through resistance at 184.375 to the high at 184.90. The enthusiasm didn’t last long and price pulled back, settling at 183.925. The low came in at 182.85. The low is just above support at 182.70. If settlement fails, we could re-test support at 182.70. Support then comes in at the rising 8-DMA, now at 182.225. If settlement holds, we could re-test resistance at 184.375. Resistance then comes in at 185.80.
The Feeder Cattle Index increased and is at 179.02 as of 12/06/2022.
February Live Cattle showed some gumption on Friday, rallying all session to the high at 156.05 and dipping at the end of the day to settle at 155.55. The low came in at 153.875. The rally took price past resistance at 155.10, but it stalled just below resistance at 156.30. In my opinion, traders looked at Thursday’s export sales in a positive light and are thinking that cutouts might have put in an early low for the season. Cattle supply is perceived to have peaked and expectations are for slaughter to shrink and cutouts to firm, with packers having to pay for cattle and retailers having to be more aggressive in their beef purchases to guarantee a supply of beef for consumers. I think that was revealed when cutouts made a low on December 6th at 242.65 and FOMO took over on the seventh, driving prices higher. If settlement fails, we could re-test support at 155.10 and then the rising 21-DMA now at 154.75. If settlement holds, we could test resistance at 156.30. Resistance then comes in at 157.25.
Boxed beef cutouts were higher as choice cutouts increased 1.65 to 248.93 and select rose 0.71 to 221.26. The choice/ select spread widened and is at 27.67 and the load count was 98.
Friday’s estimated slaughter is 120,000, which is below last weeks and last year’s 123,000. Saturday slaughter is expected to be 24,000, which is below last week’s 28,000 and last year’s 57,000. The estimated total for the week (so far) is 652,000, which is below last week’s 663,000 and above last year’s 668,000.
The USDA report LM_Ct131 states: Thus far Friday negotiated cash trade was light to moderate on moderate demand in the Southern Plains. In the Texas Panhandle live purchases have traded steady to 2.00 lower this week from 153.00-155.00. In Kansas compared to last week live purchases have traded steady to 1.00 higher from 155.00-156.00. Trade was light on moderate demand in Colorado with live purchases steady compared to last week at 157.00. In Nebraska and the Western Cornbelt trade was light on light to moderate demand. Not enough purchases for an adequate market test. In Nebraska on Wednesday live purchases traded at 156.00 with dressed purchases at 247.00. The latest established market in the Western Cornbelt was last week with live and dressed purchases from 157.00-158.00 and at 249.00, respectively.
The USDA is indicating cash trades for live cattle from 153.00 – 158.50 and from 243.00 – 247.00 on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, December 15, 2022 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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