April Feeder Cattle opened higher at the low of the day (252.375). The low was just above the key level at 252.35 and the breakout saw price rally the rest of the session to the high at 255.25. It settled near the high at 255.10. The rally took price above resistance at 254.30 and climbed above resistance at the 21-DMA now at 254.775. The cash market remains strong as the index nears the September high at 254.10, making a new high for the recent up move at 250.86. The settlement above resistance puts resistance at 257.925 in play. A pullback below 254.30 could see price revisit support at 252.35.
The Feeder Cattle Index increased and is at 250.86 as of 03/15/2024.
June Live Cattle is now the lead contract as its volume has exceeded the volume of the April contract. June is trading below the April contract and this puts futures lower on the continuous chart, initially near the lows of the last break down of the April contract. The April contract traded down to 182.85 and the open of the June contact saw price at 183.625, which was higher than its previous close and also the Monday low. Price rejected its lower location and rallied all session to the high at 185.45. This took price back above resistance at 184.35 as it approached the 185.75 resistance level. Settlement was just below the high at 185.40. The price action was strong in front of cattle cash trade as producers and packers sorted through their needs for the week. The showlist is nominally higher for the week, which keeps producers in control of the market in my opinion. Last week’s slaughter at 601,000 was much higher than the 570,000 – 580,000 thrown around as expectations for last week. Packers must have had more orders to fill than expected as they won’t slaughter them if they don’t need to, in my opinion. This puts another thing that’s on my mind as some analysts are saying that feedlots aren’t current because weights are climbing in a time period where expectations are for weights to decline seasonally. In my opinion, packers are demanding cattle to be heavier and they are paying for it, as you can see by the higher cash markets. Packers usually discount cattle that are heavier than what they want and from what my producers are telling me, that isn’t happening. So, if discounts aren’t occurring and packers are paying just about record prices for cattle, how are feedlots not current? Even at these high weights. Remember, packers won’t pay more than they have to and even with the reduction in numbers we aren’t seeing an overwhelming supply of cattle in these feedlots, in my opinion. Just a couple years ago or so packers were slaughtering 660,000 a week. We are slaughtering a lot less than that now and less than that over the past year. You would think the large feedlots would be over 13 million head with the slowdown we’ve seen in the past year, in my opinion. But we are not. They have been able to get some control over cutout prices as we get closer to the spring buying season as they prepare for the grilling season. Soon, in my opinion, demand will warrant bigger slaughter numbers and they will be under severe pressure to get it done. I don’t believe demand will crater just yet as last year’s cutout prices were higher. I think cash and futures prices will continue higher as a result. We’ll See!!… If futures can get above 185.75, it could approach resistance at 187.725. If futures fail from settlement, it could re-test support 184.30.
Boxed beef cutouts were higher as choice cutouts increased 1.43 to 313.33 and select increased 0.65 to 303.05. The choice/ select spread widened and is at 10.28 and the load count was 114.
Monday’s estimated slaughter is 120,000, which is above last week’s 111,000 and below last year’s 124,621.
The USDA report LM_Ct131 states: Thus far for Monday in the Southern Plains and Nebraska negotiated cash trade has been at a standstill. In the Western Cornbelt negotiated cash trade has been mostly inactive on light demand. Last week in the Southern Plain live FOB purchases FOB purchases traded at 186.00. Last week in Nebraska live FOB purchases traded from 187.00-188.00 with dressed delivered purchases traded from 295.00-300.00. Last week in the Western Cornbelt live FOB purchases traded from 187.00 – 189.00, with dressed delivered purchases at 298.00.
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, March 19, 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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