August Feeder Cattle gap opened lower and traded to the session low at 227.725. This was just below support at 227.80 and it held back the selling. Price reversed and rallied the rest of the session to the high at 229.725. This was just under resistance at 229.825 and it dipped and settled at 229.325. The weaker open came about as the Cattle on Feed report on Friday showed a higher placement number than expected. As the day wore on, traders discounted the report as most of the excess placements took place in Texas, which has suffered a severe drought. A rally past 229.825 puts resistance at 231.175 and 233.10 in play. If price fails to hold settlement, we could revisit the Monday low. Support then comes in at 226.925.
The Feeder Cattle Index decreased and is at 202.24 as of 04/21/2023.
June Live Cattle also gap opened lower and made the low at 162.70. The low was just above strong support at 162.725 and the rising 50-DMA now at 162.70. It turned higher and rallied the rest of the session to the high at 164.875. The high stopped just short of resistance at 164.90 and it settled at 164.55. The Cattle on Feed Report was considered bearish but traders didn’t care., coming in and buying the lower open. Futures are trading at a steep discount to cash and in my opinion, that limited the downside. The report still sowed a decline and we are short cattle in my opinion and it will only get worse over time. Packers are managing slaughter numbers and are trying to maintain margins, while they try to extend the supply as we enter the time period where we should see an increase in market ready supply. All in the effort of knocking down the price they pay for cattle and keeping cutout prices strong. A break out above 164.90 could send price up to resistance at 166.975. A breakdown from settlement could see support re-tested at 162.725.
Boxed beef cutouts were higher as choice cutouts increased 0.52 to 307.12 and select increased 0.90 to 288.70. The choice/ select spread narrowed and is at 18.42 and the load count was 70.
Monday’s estimated slaughter is 124,000, which is above last week’s 121,000 and even with last year.
The USDA report LM_Ct131 states: So far for Monday in the Southern Plains and Nebraska negotiated cash trading has been at a standstill. In the Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough purchases for a market trend. The most recent reported market was last week in all regions. In the Texas Panhandle live purchases traded at 175.00. In Kansas live purchases traded from 173.00-175.00. In Nebraska live and dressed purchases traded from 180.00-185.00 and from 284.00-290.00, respectively. In the Western Cornbelt live and dressed purchases traded from 180.00-183.00 and at 288.00, respectively.
The USDA is indicating cash trades for live cattle 175.00 and at 284.00 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, April 13, 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
www.walshtrading.com
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
tested support at the
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
Blog – Sign Up Now