April Feeder Cattle opened higher and raced to the high of the day at 258.325. The rally punched through resistance at 257.925 but stalled just below trendline resistance at 258.45. It then broke down, blasting through the short-term MA’s (8 @255.675 and 13 @ 255.875) and took out Thursday’s low at 254.50 and support at 254.30 to the low at 253.70. It settled near the low at 254.10, below support. The failed break out and settlement below support puts pressure on bulls in the near-term with support at the rising 21-DMA, now at 252.975, the next line of defense for the bulls. The index has started to move higher so in my opinion provides some backbone for the bulls. If futures can retake resistance at 254.30, we could revisit the short-term Mas. Taking out the Mas could see futures revisit resistance at 257.925.
The Feeder Cattle Index increased and is at 248.74 as of 03/07/2024.
April Live Cattle opened higher and rallied to a new high for the up move at 189.95. The rally stopped just shy of resistance at 190.075 and unable to handle success … collapsed. It broke down the rest of the session to the low at 187.125 and settled near the low at 187.60. The breakdown took price below support at 187.725 and right at short-term MA support at the 8 and 13-DMAs now at 187.20 and 187.375 respectively. This breakdown put price back into its consolidation band as traders took profits into the weekend. The cash market is strong even as packers cut back on slaughter numbers. Cash made a new high for the year at 187.00 and saw its average for the week jump about 2 bucks higher than last week. Wow! Cutouts creep higher and will likely continue higher as we move towards spring. Packers don’t pay up for cattle unless they have to and even as they slow slaughter, they have been forced to pay up for needed supply. Could this mean that they are not backing up supply enough? This week’s slaughter cratered to 583,000. Packers are getting more desperate to back producers into a corner. Grilling season is coming. Consumers do not seem to be losing their taste for beef. The economy is moving forward and this is a major election year. The Fed is likely to cut rates in the near future. This could keep the economy moving and demand for beef strong. We’ll see! … If futures can hold the short-term Mas, it could retake resistance at 187.725 and move towards the Friday high. If futures fail from settlement, it could test support at the rising 21-DMA now at 186.75. Support then comes in at 185.75.
Boxed beef cutouts were higher as choice cutouts increased 0.43 to 307.04 and select increased 1.17 to 297.43. The choice/ select spread narrowed and is at 9.61 and the load count was 80.
Friday’s estimated slaughter is 97,000, which is below last week’s 100,000 and last year’s 113,941. Saturday slaughter is expected to be 2,000, which is below last week’s 4,000 and last year’s 16,299. The estimated total for the week (so far) is 583,000, which is below last week’s 599,000 and last year’s 631,428.
The USDA report LM_Ct131 states: Thus far for Friday in all trading regions negotiated cash trade has been slow on light demand. Compared to last week in the Southern Plains live FOB purchases traded 2.00 higher at 185.00, on a light test. The most recent market in Nebraska was Thursday with live FOB purchases traded from 185.00-186.00, mostly at 185.00, with dressed delivered purchases traded from 292.00-300.00. The most recent market in the Western Cornbelt was Thursday with live FOB purchases from 185.00 – 186.00, dressed delivered purchases traded at 292.00.
The USDA is indicating cash trades for live cattle from 178.00 – 187.00 and from 290.00 – 300.00 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 12, 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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