December Live Cattle gap opened lower and traded downward all session to the low at 181.225. It made the high at 183.275 and settled near the low at 181.225. The breakdown follows Friday’s Bearish Engulfing Candlestick formation on a technical level and weaker than expected cash market. Traders had expected cutouts and the cash trade to be higher and trade was lackluster all around leading to worries that demand for beef is starting wane. Some analysts also put out some early vibes on a build in feedlots for the upcoming Cattle on Feed report. The breakdown took price below support at 182.575 and the rising 100-DMA now at 181.65. Settlement was below the 100-DMA and just above the 181.175 support level. The close below the 100-DMA needs a quick reversal on Tuesday, in my opinion or we may see more pressure on cattle. The breakdown started on Friday after closing the gap created from the October 20th low at 184.425 and the October 23rd high at 183.65. Friday’s high was at 184.975. Monday’s opening price action created another gap with Friday’s low at 183.525. This keeps the pressure on bulls and could embolden packers to lower bids as some producers held back cattle last week looking for this week to be better. This should add to the showlist and if cutouts don’t improve, packers may cut back on purchases and slaughter, keeping pressure on producers. Packers will be on the lookout for nervous producers who want to get rid of their cattle and set the tone for the week. The bulk of trade will probably take place late with packers hoping for more pressure on futures. A failure below 181.175 could see price test support at 179.40. Support then comes in at 178.10. If futures can reclaim the 100-DMA, a test of the 182.575 resistance level is possible. Resistance then comes in at the gap and then the declining 21-DMA now at 183.85.
Boxed beef cutouts were lower as choice cutouts decreased 0.62 to 301.72 and select decreased 1.65 to 270.36. The choice/ select spread widened and is at 31.36 and the load count was 87.
Monday’s estimated slaughter is 122,000, which is below last week’s 125,000 and even with last year.
The USDA report LM_Ct131 states: Thus far for Monday in Southern Plains and Nebraska negotiated cash trade has been at a standstill. In the Western Cornbelt negotiated cash trading has been mostly inactive on light demand. However not enough purchases for a market trend. Last week in all trading regions live FOB purchases traded at 185.00. Last week in Nebraska and the Western Plains dressed delivered purchases traded at 292.00.
The USDA is indicating cash trades for live cattle at 181.00 and nothing on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, November 07, 2023, 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
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