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January Feeder Cattle opened higher and surged to the high of the day at 261.20. The rally set a new high for the recent up move and took price to just past resistance at 261.05. The market turned around and collapsed. It broke down to the session low at 255.575 and then consolidated near the low the rest of the session, settling at 256.85. The breakdown to the low tested support at the rising 8-DMA now at 256.175. Traders took price higher at the open as fear set in about the Screwworm problem in Mexico. The rally couldn’t hold however as the US and Mexico are working out details on how the Mexican cattle can make it across the border. Once traders realized they missed out on taking profit at a new high, the selling steamrolled as panicked longs looked like they just said get me out at any price. The panic eventually subsided and the market drifted after late morning. The price action formed a Bearish Engulfing candlestick at the top of a rally which could lead to lower prices. The cash index is strong which could limit downside if traders believe cash will continue higher. 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 259.575. A breakdown from settlement could see a re-test of support at the 8-DMA. Support then comes in at 254.30.
The Feeder Cattle Index surged and is at 257.13 as of 11/29/2024.
February Live Cattle opened higher and rallied to the high of the day at 189.375. The rally took out the Friday and Wednesday highs but could not take advantage. It reversed course and broke down to the session low at 187.025. It bounced off the low and settled at 187.925. The breakdown took price below support at 187.725 and it stopped just above support at the rising 13-DMA now at 186.975. The price action took set up an outside day candlestick with a lower close which puts bears in control of the day. I think the session followed the pattern of the Feeder market which was in control of the price movement. Cash was strong last week, breaking above 190.00 but with the holidays coming in short order, will the packers need to buy a lot of cattle after the major purchases they made last week. Plus, with December here, they have contracted cattle coming due. Cutouts were strong on Monday and could continue higher this week but, it usually breaks down as we get closer to the holidays. This could keep a lid on cash prices, especially now that we have broken 190.00 as packers would like to limit the upside. Slaughter should lighten during the holiday weeks also putting the brakes on packer buying for the short slaughter weeks. We’ll see!… If price can’t hold support at 187.725, it could re-test support at the rising 13-DMA. Support then comes in at the rising 21-DMA now at 186.175. If settlement holds, we could see price test resistance at the Monday high and then 190.075.
Boxed beef cutouts were higher as choice cutouts jumped 2.49 to 313.01 and select surged 2.70 to 277.00. The choice/ select spread narrowed and is at 36.01 and the load count was 80.
Monday’s estimated slaughter is 117,000, which is below last week’s 120,000 and last year’s 124,268.
The USDA report LM_Ct131 states: Thus far for Monday negotiated cash trading has been at a standstill in all regions. The last reported market in all regions was last week. In the Texas Panhandle live FOB purchases traded from 188.00 -190.00. In Kansas live FOB purchases traded at 190.00. In Nebraska live FOB and dressed delivered purchases traded from 190.00-192.00 and at 295.00, respectively. In the Western Cornbelt live FOB and dressed delivered purchases traded at 190.00 and from 294.00-305.00, respectively.
The USDA is indicating no cash trades for live cattle and 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
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