The Feeder Cattle Index decreased and is at 237.01 as of 11/08/2023.
December Live Cattle opened higher and made the high at 180.075. It broke down to the low of the day at 174.125 by late morning, consolidated and settled near the low at 174.125. The initial strength was an attempt to keep price above rising trendline support at 179.20. Once that failed it broke down and traded through support at 178.10 and then the Wednesday low at 176.625. Support at 175.95 couldn’t contain the selloff and it wasn’t until the confluence of support at 174.425 and rising trendline support at the same price that stalled the decline. The price action is still under the Bearish Engulfing candlestick formed just a day after closing the gap from the October 2oth low at 184.425 and the October 23rd high at 183.65. This double whammy has been an effective weapon for bears, in my opinion. The cash market has collapsed as a result of the futures debacle and is trading more than $4.00 off of last week’s average price. Sentiment has changed as the Cattle on Feed Report and demand expectations have overwhelmed tight near-term supply. 2024 futures contracts have also taken a beating and are trading at a discount to the cash market (as is the front contract) instead of the premium they previously had been trading. Many expectations were for beef cutouts to surge and head towards 325.00 or higher. Prices peaked at just above 309.00 and have fallen. Cutouts have failed to launch and have broken down below 300.00. Grocers and restaurants have seemingly taken control of the market as they are not aggressively pursuing beef products and have been able to keep prices where view them as value. Demand worries have surfaced. Reports are coming out about credit card delinquencies as young people have built up a heavy debt load and have started to struggle to pay the bill. This is how they pay for their needs and desires. If they can’t pay the vig, they won’t be using cards for expensive beef purchases. The upcoming Cattle on Feed Report is expected to show bigger feedlot supply which indicates supply could be plentiful into the springtime. The packer slaughter slowdown has finally increased supply enough to put feedlots over the edge and above last year’s numbers. A failure from the low could see price test support at the rising 200-DMA now at 173.075. Support then comes in at the old all-time high at 172.75. If futures can hold settlement, a test of the 175.95 resistance level is possible. Resistance then comes in at 178.10.
Boxed beef cutouts were mixed as choice cutouts increased 0.67 to 299.42 and select decreased 1.61 to 269.42. The choice/ select spread widened and is at 30.00 and the load count was 133.
Thursday’s estimated slaughter is 122,000, which is below last week’s 124,000 and last year’s 129,000. The estimated total for the week (so far) is 493,000, which is below last week’s 496,000 and last year’s 507,000.
The USDA report LM_Ct131 states: Thus far for Thursday in all regions negotiated cash trading has been slow on light to moderate demand. In the Texas Panhandle, compared to last week, live FOB purchases traded mostly 4.00 lower at 181.00, with a light test noted. In Kansas, compared to last week, live FOB purchases traded mostly 5.00 lower at 180.00, with a light test noted. In Nebraska a few live FOB purchases traded at 181.50, however not enough for a market trend. Last week live FOB purchases traded at 185.00. Dressed delivered purchases, compared to last week, traded mostly 5.00 lower at 287.00. In the Western Cornbelt a few live FOB and dressed delivered purchases traded at 180.00 and from 283.00-287.00, however not enough for a market trend. Last week live FOB purchases traded at 185.00 and dressed delivered purchases traded at 292.00.
The USDA is indicating cash trades for live cattle from 178.00 – 182.00 and from 280.00 – 290.00 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, November 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
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.