August Feeder Cattle gap opened higher, making the low at 255.675 and rallying all session to the high at 259.50. It pulled back a touch at the end of the day to settle at 258.475. The Cattle on Feed report was the driving force for the rally, in my opinion as placements came in less than anticipated. The rally took price past resistance at 257.925, with the high and settlement above it. With August the lead contract the surge in price puts Feeders in position to take out the previous high at 260.80 on the continuous chart on its way to challenge the all-time high at 264.675 established in September 2023. If futures hold above settlement, it could test the March and Feb Highs at 260.60 and 260.80. Resistance is just above at 261.05. Resistance then comes in at 262.075. If futures fail from 257.925, we could test the Monday low and the look at the Friday high 254.95. This is the bottom of the gap formed with Monday’s price action.
The Feeder Cattle Index increased and is at 242.11 as of 04/19/2024.
June Live Cattle also gap opened higher, making the low at 176.675. It raced to the high at 178.80 and then consolidated the rest of the session, settling near the high at 178.05. Once again, in my opinion the Cattle on Feed report led the way higher. The early rally however, didn’t last long as reactions to reports exhausts itself. The good news is that after a nasty pullback that saw cattle pullback to test the low of the day, the market recovered and moved towards the high. This kept the gap in place which, in my opinion is bullish for cattle. The gap extends from the Friday high at 175.875 to the Monday low. This could provide support on a pullback. The rally took price past resistance at the 100-DMA at 177.85 and the key level at 1787.10 and settlement was in between them, forcing bullish traders to have to work hard on Tuesday. Problems are there in the short-term as slaughter levels remain low and cutouts, primarily the choice cutout hasn’t made it out of the starting gate as we move towards the grilling season. Choice cutouts have remained around the 300.00 mark while select cutouts continue to catch up to the choice cutout. I think the reason for this is the reduction in cow slaughter that has forced grocers to find other avenues to get enough hamburger meat ready for consumers. I think their focus has been in this arena and when they get enough in front of them, they will look to the choice arena. A breakout above resistance (178.10) could send price upwards to test resistance at 179.40. Resistance then comes in at the 200-DMA now at 179.95 and then 181.175. A breakdown below the 100-DMA could see price test support at the gap.
Boxed beef cutouts were higher as choice cutouts increased 0.26 to 295.93 and select increased 1.04 to 291.87. The choice/ select spread narrowed and is at 4.06 and the load count was 104.
Monday’s estimated slaughter is 113,000, which is below last week’s 121,000 and last year’s 125,147.
The USDA report LM_Ct131 states: Thus far for Monday in all trading regions negotiated trade has been at a standstill. Last week in the Southern Plains live FOB purchases traded at 182.00. Last week in Nebraska live FOB purchases traded at 183.00, with a few purchases up to 184.00, with dressed delivered purchases traded from 292.00-293.00. Last week in the Western Cornbelt live FOB purchases at 184.00, with dressed delivered purchases at 292.00, on a light test.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, April 23, 2024, 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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