Cattle futures traded higher today with the April contract settling at 165.10, much of the move was off of last week’s cash movement with an average of $1.55 higher from the 5-area average. The April futures contract ended the day just 35 cents over February, showing the industry remains quite skeptical of the cash market’s ability to sustain the advance beyond the very short term. The wholesale market is giving a lot of support to the market, with choice cutout building upon Monday’s solid gains today. Choice cutout jumped $3.83 to $286.72 at midsession, while select values surged $2.57 to $270.52. The choice quote is only slightly below its early-January 2023 and January 2022 highs and seems set to challenge the $300 level for just the third. Select beef is still a good bit below its January 2022 peak, but in my view, it still looks like it will continue climbing in the short term.
Current March feeder futures priced just a few dollars below their January and February highs suggest bulls have the short-term technical advantage, but their inability to keep prices from sliding lately implies a weakening position in my opinion. Today’s close only slightly above initial support at the contract’s 10-day moving average near $186.78 gives me the indication that support here is wavering in my opinion, but the intra-session bounce from the 20-day moving average near $185.73 indicates that support is much stouter. That’s backed by the 40-day moving average near $185.26, but a close below that level would likely have bears targeting $180.00. Today’s high marked initial resistance at $187.40, with additional resistance ranging from that point up to the Feb. 7 high of $188.575. A close above that point would open the door to a test of the $190.00 level, with a follow-through advance likely having bulls targeting $195.00.
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Peter McGinn
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