For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, November 26, 2024, at 3:15 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.
January Feeder Cattle gap opened higher and surged to the high of the day at 259.525. The rally stopped just shy of trendline resistance on the continuous chart at 259.575 and it reversed course, collapsing and closing the gap on its way to the session low at 254.90. It consolidated near the low the rest of the session to settle at 255.475. Traders took price higher at the open as Mexico informed the USDA that a confirmed case of New World Screwworm occurred in Chiapas, near the Guatemala border. Stories came about the US will restrict cattle coming in from Mexico for a month and as the language changed to heightened import restrictions on animal products, the fear of supply disruptions for feeder cattle gave way. Authorities in Mexico and Guatemala are working to contain the pest’s spread. Producers’ that I have spoken with say the worm is nothing to be alarmed about and that treatments are available to treat cattle that may get infected. Worms happen and they get treated. The Cattle on Feed report was overshadowed by the news and the fade in the market set up a Shooting Star candlestick. This is a potentially bearish formation if Bears press price on Tuesday below support at 254.30. This would create a bearish three bar pattern called an Evening Star candlestick formation. We’ll see!… If price holds settlement, it could test resistance at 257.925. Resistance then comes in at the down sloping trendline, now at 257.50. A breakdown from settlement could see a test of support at 254.30. Support then comes in at 252.30.
The Feeder Cattle Index increased and is at 254.72 as of 11/22/2024.
February Live Cattle opened higher and surged to the high of the day at 190.05. The high was just below resistance at 190.075 and it reversed course and broke down the rest of the session to the low at 187.575. It settled near the low at 187.70. The breakdown took price below support at 187.725. The price action took price to a new high on the continuous chart and the reversal set up a Shooting Star candlestick. The price action also sets up a potential Evening Star candlestick formation but it is looking like a weak formation, in my opinion. Cattle also reacted to the foreign cattle news but it mostly rallied in accordance to the Feeder market, which in my opinion led the way higher. The cash market last week rebounded, with the average up to 186.39 from 184.79 as the packer was more aggressive in purchasing cattle as they increased slaughter last week in front of the Thanksgiving holiday. Cutouts were slightly higher on Friday over the week before and we will be entering the Christmas and New Year’s Holiday seasonal where cutouts are expected to climb and demand for beef to increase. Here’s the kicker…. Beef demand in my opinion has been excellent even with higher beef prices. You can see it in the Choice/ Select spread which continues to climb as consumers clamor for choice cuts in front of the holiday season. I don’t think consumer demand will wane in the short run. The question will be; will demand remain strong after the holidays? Corporations are changing their work from home policies with many large firms telling employees you have to be in the office 5 days instead of 3 days. Could this affect eating habits with less time at home? Cash started the week higher on Monday with prices at 187.00 – 188.00 in this short buy week. It is a positive start for the producer. Can it continue? We’ll see!… If price can’t hold support at 187.725, it could test support at the rising 8-DMA now at 186.70. Support then comes in at 185. 75. If settlement holds, we could see price re-test resistance at 190.075.
Boxed beef cutouts were higher as choice cutouts jumped 2.30 to 309.71 and select increased 1.67 to 273.74. The choice/ select spread widened and is at 35.97 and the load count was 126.
Monday’s estimated slaughter is 120,000, which is above last week’s 118,000 and below last year’s 124,069.
The USDA report LM_Ct131 states: So far for Monday, negotiated cash trading has been mostly inactive on light demand in all feeding regions. The latest established market was last week in all feeding regions. In the Southern Plains, live FOB purchases traded from 186.00-187.00. In Nebraska, live and dressed purchases traded mostly from 187.00-188.00 and 290.00, respectively. In the Western Cornbelt, live FOB purchases sold from 185.00-188.00 and dressed delivered purchases sold from 290.00 to 300.00.
The USDA is indicating cash trades for live cattle from 187.00 – 188.00 and nothing on a dressed basis (so far).
**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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