Cattle markets were down today with feeders down $2.75 in the November contract and down a $1 in the Feb Live contract. Last week packers purchased 99,000 at $1.45 from the prior week, which is the highest it’s been since August. Feeder cattle hit a new low today with managed fund shorts having the largest short position in 3 years. With corn prices rallying 15 cents today at the close due to the news overnight of the escalating tensions in the Ukraine/Russia war, this put further pressure on the feeders for the day. Fundamentally from some of the ranchers I’ve been speaking with, there is about 1 million head of cattle outside the feedyards than there were a year ago at this time.
The USDA estimated cattle slaughter numbers came in at 118,000 head Friday and 36,000 head for Saturday which brought the total for last week to 664,000 head, unchanged from the previous week but up from 657,000 a year ago. Estimated beef production was 550.2 million pounds, up from 547.2 million a year ago. The estimated average dressed cattle weight last week was 830 pounds, up from 829 the previous week but down from 835 a year ago.
From a technical analysis viewpoint, with Feb cattle being down $1 today, I believe the next level of support is around the $150 area in the near term. Supply concerns are still a factor for the 1st quarter, but demand concerns are at the forefront as to why we aren’t seeing more strength in these market in my opinion. Feb cattle has been trading in a 2 dollar range from $150 to $152 since September 28th, and in my opinion based off the amount of volume that was traded on the 29th I believe there is a lot of buying interest down near $150. The 21-day exponential moving average right now is at the 32% retracement level and the 40 exponential is just below the 50% retracement level which is the next level of resistance around $153.