Walsh Trading Daily Insights
Commentary
August Feeder Cattle gap opened higher and pulled back to the session low at 223.125 to close the gap. Feeders recovered and rallied to an early high, drifted, then rallied the rest of the session to the high at 226.50. It settled near the high at 226.125. It was an impressive rally as corn prices tanked early then drifted near the low the rest of the session. The break down in corn emboldened bulls, expected cheaper feed for cattle. In the real world, cattle feeders are still operating under higher prices and the Feeder Index is expected to decline as buyers are beginning to balk at the high Feeder prices. The rally took price past resistance at 225.675, stopping just shy of resistance at 226.925 and it settled below it. A rally past resistance could send price up to resistance at 227.80 – 228.05. A failure from settlement could see price test support at 225.675. Support then comes in at 224.475.
The Feeder Cattle Index decreased and is at 199.42 as of 05/08/2023.
June Live Cattle opened higher, rallied to resistance at the 13-DMA at 163.675 and then pulled back to the low at 161.875. The low is just above support at 161.75 and price consolidated near the low till late morning. Some light early cash trades at higher prices than last week sparked a nice rally in futures, in my opinion as futures rallied the rest of the session to the high at 164.15. It settled near the high at 163.925. With cattle futures trading at a wide discount to cash, the higher initial trade in the cash provided enthusiasm to narrow the differential between the two markets. Expectations were for packers to be able to soften cash again this week, but there are rumors that one of the large packers may be short bought so producers are going to try to hold out for better pricing, in my opinion. The rally took price past resistance at the 21-DMA at 163.95 and settlement was a tick below it. This will key trade on Wednesday in my opinion as a rally past here could send price up to resistance at 164.90. Resistance then comes in at the May 1st high at 165.775. A failure from settlement could see price revisit support at 162.725. Support then comes in at 161.75.
Boxed beef cutouts were lower as choice cutouts decreased 1.18 to 307.38 and select dipped 0.23 to 284.89. The choice/ select spread narrowed and is at 22.49 and the load count was 121.
Tuesday’s estimated slaughter is 128,000, which is above last week’s 127,000 and last year’s 124,000. The estimated total for the week (so far) is 254,000, which is above last week’s 250,000 and last year’s 243,000.
The USDA report LM_Ct131 states: So far for Tuesday 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 light demand. Not enough purchases for a market trend. The latest established market in all regions was last week. In the Southern Plains live purchases traded at 172.00. In Nebraska live and dressed purchases traded from 176.00-178.00 and at 281.00, respectively. In the Western Cornbelt live and dressed purchases traded from 172.00-178.00 and from 280.00-285.00, respectively.
The USDA is indicating cash trades for live cattle from 176.00 – 177.00 and at 277.00 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, May 11, 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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