October Feeder Cattle was relentless in pursuit of higher prices. It rallied the entire session, making the low early at 258.775 and rallying to a new all-time high at the end of the day. The new high came after settlement at 261.65 with the settlement price at 261.45, also a new all-time high. The cash feeder market is rallying and has set futures on fire. The are Feeder weight cattle in some areas trading in the 260s, so, we could see the index surge in the next few days, in my opinion. The high prices are occurring in areas that has some scratching their heads as to why in the world are buying feeders at such high prices over there. This is happening with no major retention happening for heifers. What will happen to price when the rebuild of the cattle herd gets serious??? Continued strength could face resistance at daily pivot levels. R1 is at 262.325, R2 is at 263.425 and R3 is at 265.20. A failure from settlement could see the Friday prior all-time high at 259.65. The Thursday prior all-time high is next support at 257.925.
The Feeder Cattle Index increased and is at 250.42 as of 9/08/2023.
October Live Cattle opened higher, made the low at 183.10 and rallied to the high of the day at 184.80. The rally was over by 10:15 CDT and it pulled back and came close to the low before recovering and settling at 184.225. Futures trader believe, in my opinion, that supplies are tight and will continue to tighten going forward. Demand for beef has been better than expected domestically as consumers, so far, haven’t been deterred from eating beef, even at ever higher prices. We just like the taste of beef and that is good for producers as our exports are erratic at best and not giving much help to producers. With the Dollar grinding higher and beef cutouts high, it seems that combo has made it difficult to keep exports climbing. Cattle is struggling at the 184.35 resistance level, trading above it but unable to settle above it. So, traders think the cash market which has stagnated with the North drifting lower and the South a little higher, will rebound and move higher. It is giving some pause for traders as they would like to see a firming in price return to the North. The North – South spread has narrowed but and cash as of Friday had an average price lower than the previous week. This is probably why futures haven’t tested the all-time high price at 185.75 as of yet. It is a good sign however, as prices have been trading at the lowest common denominator, which is the South, so traders must believe the South will rise by the October expiration. We’ll see… A rally above the high could see price test resistance at the pivot resistance level R1 at 185.05. Resistance then comes in at 185.75. A failure from settlement has support at S1 at 183.35 and then 182.575.
Boxed beef cutouts were lower as choice cutouts fell 2.79 to 310.11 and select decreased 0.61 to 287.33. The choice/ select spread narrowed and is at 24.67 and the load count was 126.
Monday’s estimated slaughter is 125,000, which is above last week’s 3,000 and below last year’s 126,000.
The USDA report LM_Ct131 states: Thus far for Monday in all trading regions trade has been mostly inactive on light demand. The most recent market test in all trading regions was last week. In the Southern Plains live FOB purchases traded at 180.00. In Nebraska live FOB purchases traded from 183.00-184.00 and dressed delivered purchases traded at 290.00. In the Western Cornbelt live FOB purchases traded from 183.00-184.00 and dressed delivered purchases traded from 288.00-290.00.
The USDA is indicating no cash trades for live cattle and at 290.00 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, September 14, 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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