Walsh Trading Daily Insights
Commentary
April Feeder Cattle is now the lead contract as its volume has exceeded the volume of the March contract. April opened higher and traded down to the session low at 193.10. Bulls came into the market and took price up to the session high at 195.25. The market pulled back and settled in the middle of the range at 194.225. The pullback on the open tested support at 193.00 and the rally tested resistance at 195.40. Corn was weak all session, helping to drive Feeders higher, but resistance held as futures are trading at a high premium to the index and may be too extended. If Feeders hold settlement, we could re-test resistance at 195.40. Resistance then comes in at 197.975. A failure from settlement could see price revisit support at 193.00. Support then comes in at the rising 50-DMA now at 190.60.
The Feeder Cattle Index decreased and is at 182.24 as of 02/24/2023.
April Live Cattle opened higher and made its way to session high at 165.95 by mid-morning. Price stalled and it traded lower the rest of the session to the low at 164.775. It settled near the low at 164.975. It was a lackluster session, trading within Friday’s range forming an inside candlestick. The Cattle on Feed report came in within analysts’ parameters and the market even though it continues to show declining numbers didn’t care. It is more about futures following very closely to the cash market and the cash cattle trade made a new high at 166.00 this past week and futures aren’t ready to make the leap to anticipate higher prices. I think part of the reason is we are near all-time highs in futures for the lead contract and traders are wary in their trading. I don’t think traders are ready to push prices to new levels and want cash to lead to the promised land, in my opinion. The all-time high on my continuous chart is 172.75 for the lead contract. The pressure on Monday saw the low get just below support at 164.90. Settlement was just above it. If futures settlement, we could move towards the Friday high at 166.40 and then resistance at 166.975. A failure below the low could see price test support at the rising 21-DMA now at 164.075. Support then comes in at 162.725.
Boxed beef cutouts were higher as choice cutouts increased 1.06 to 288.34 and select jumped 2.17 to 279.25. The choice/ select spread narrowed and is at 9.09 and the load count was 69.
Monday’s estimated slaughter is 124,000, which is above last week’s 104,000 and below last year’s 125,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. For the previous week in these regions live purchases traded mostly at 164.00. Last week in Nebraska dressed purchases traded at 262.00. For the prior week in the Western Cornbelt dressed purchases traded from 260.00-262.00.
The USDA is indicating no cash trades for live cattle and 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, March 02, 2023 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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