November Feeder Cattle broke out above the Rectangle consolidation range on Thursday, trading to 253.80. It made the low at 251.775 and settled near the high at 253.575. The rally took price past resistance at the declining 13-DMA, now at 252.875 but it stalled below resistance at 254.30 and the 50-DMA looms just above at 254.675. The Feeder index has been revolving around the 250.00 area this week and after trading at a discount, futures are at a slight premium to the index. If bulls get their momentum back, futures could increase the premium over cash and send futures to test higher resistance levels. The break out above the rectangle could see price press forward to test its break out objective at 256.75. This is just above resistance at the 21-DMA now at 256.175. Resistance next comes in at 257.925. A failure from settlement could see price revisit support at 252.35. This is just above the rectangle high (252.325). If futures can’t recover off a test of support, it could put us back in the range we were in over the past seven days. The low of the range is 248.225. This could dishearten bulls, in my opinion.
The Feeder Cattle Index increased and is at 250.30 as of 10/11/2023.
December Live Cattle also broke out of its rectangle range on Thursday, trading to a high at 187.925. It made the low at 186.625 and settled near the high at 187.80. This is a nice two-day rally after making a new low and high for the rectangle on Wednesday. Yesterday’s surge and today’s follow-through higher set the stage for aggressive packer buying in the cash market, in my opinion. Thursday’s cash action saw higher trading in the major regions, with the South trading as high as 184.00 according to some reports and the North saw prices as high as 186.00. The rally we saw could be the beginning of the seasonal bull run cattle usually sees as we move along from October to December time period. This quarter is expected to see the tightest supplies of 2023, which is impressive after the packer slaughter slowdown we’ve seen over the past few months. Cutouts are lagging, so, in my opinion packers are struggling but cutouts are expected to move higher during this time frame. A rally past the Thursday high could see price test resistance at the rising 21-DMA, now at 188.375. Resistance then comes in at 190.075. A breakdown from settlement could see support tested at the 8-DMA, now at 186.125. Support then comes in at 185.575.
Boxed beef cutouts were mixed as choice cutouts increased 0.91 to 301.19 and select decreased 0.28 to 275.02. The choice/ select spread widened and is at 26.17 and the load count was 166.
Thursday’s estimated slaughter is 120,000, which is below last week’s 124,000 and below last year’s 127,000. The estimated total for the week (so far) is 499,000, which is even with last week and below last year’s 510,000.
The USDA report LM_Ct131 states: Thus far for Thursday in the Southern Plains negotiated cash has been slow on moderate demand. Compared to Wednesday in the Texas Panhandle live FOB purchases traded steady mostly at 183.00. In Kansas most recent market was Wednesday with live FOB purchases purchases at 183.00. In Nebraska negotiated cash trade and demand has been moderate. Compared to last week live FOB purchases traded 1.00-2.00 higher at 185.00. Compared to last week dressed delivered purchase market was 2.00-4.00 higher at 292.00. In the Western Cornbelt negotiated cash trade and demand has been moderate. Compared to last week live FOB purchases traded 2.00 higher at 185.00, with a few up to 185.50. The most recent dressed delivered purchase market was last week at 290.00.
The USDA is indicating cash trades for live cattle from 181.00 – 186.00 and from 288.00 – 292.75 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, October 17, 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
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