August Feeder Cattle opened higher, made the low at 259.90 and then rallied the rest of the session to the high at 263.00. It settled near the high at 262.90. The rally took price to a new high for the recent up move, taking out resistance at 262.075 in the process. The new high puts the all-time high for the lead contract on the continuous chart on notice. The all-time high is at 264.675, established on September 15, 2023 when October 2023 was the lead contract. The Feeder Cash Index is rising and is anticipated to break above 250.00 as the May contract settled today at 250.375 with Thursday the last day for it to trade. Settlement for the contract will be on Tuesday when the Feeder Index comes out. If the index can break the psychological 250.00 level it could put the all-time high at 254.10, established on September 23, 2023 in jeopardy. Feeder supply is limited and feedlots have been aggressive once again trying to keep their supply flowing, in my opinion. This is with heifers still going to feedlots as their numbers are still going in at a high percentage…. What will happen when producers start trying to hold back on heifers? We’ll see… August is still at a stiff premium to the Index. If the index fails to break 250.00 or if it does and can’t challenge its all-time high, we could see a snap back in futures. So be wary. If settlement holds, price could move towards resistance at 264.675. A failure from settlement could see price test support at 262.075. Support then comes in at 261.05.
The Feeder Cattle Index increased and is at 248.44 as of 05/21/2024.
August Live Cattle continued to find its footing, gap opening higher, closing the gap while making the session low at 180.15 and then rallying the rest of the session to the high at 181.725. It settled near the high at 181.675. The rally took price above resistance at 181.175 with the high and settlement above it. The cash market also continues to impress as cattle has traded early in the week at higher prices. This is with the Cattle on Feed report coming out Friday after the close and a short slaughter week coming up next week. To me… that is impressive. The range so far is 187.00 – 192.00, higher than last week. Last week’s average was 188.54. The all-time high average is 189.56. That could be in danger of being surpassed this week. Poor producers! Its their turn to be all smiles as packers are feeling the pain. Cutouts are higher but have stalled. This puts them in a bind but producers remember when packers put the squeeze to them. Can they do the same? We’ll see!… In my opinion, the limited supply is why packers are slowing slaughter and having feedlots put more weight on cattle. With the lower numbers they have successfully added to production with a lower kill. The added days on feed has helped the industry supply beef to an eager consumer in a time of lower numbers. With corn prices lower it has enabled the producer to comply with the packer needs. We are coming to a time when calf-feds come to market. Will this lower weights and force packers to buy more cattle to meet their needs? I have guys telling me packers keep wanting cattle with even more weight when in the past they would have gladly taken them, telling the producer they are not ready yet. I don’t think the heavier weights are burdensome. From what I hear the packer isn’t even putting heavy discounts on cattle that don’t grade well… The cash market is strong and futures are still cheap to cash in my opinion. Cattle on Feed estimates are – on feed – 99.1% – placements 94% – marketings – 109%. If price can hold settlement, it could test resistance at 182.575. Resistance then comes in at 184.35. If price can’t hold settlement, it could test support at 181.175. Support then comes in at the rising 100-DMA now at 179.75.
Boxed beef cutouts were lower as choice cutouts decreased 0.85 to 312.17 and select decreased 1.26 to 299.61. The choice/ select spread widened and is at 12.56 and the load count was 133.
Thursday’s estimated slaughter is 122,000, which is below last week’s 124,000 and above last year’s 121,944. The estimated slaughter for the week (so far) is 364,000, which is above last week’s 363,000 and below last year’s 375,301.
The USDA report LM_Ct131 states: Thus far for Wednesday in the Texas Panhandle and the Western Cornbelt negotiated cash trade has been mostly inactive on light demand. In Kansas negotiated cash trade has been slow on light demand. There have been a few live FOB purchases at 187.00, however not enough trade for a market test. Last week in the Southern Plains live FOB purchases traded at 186.00. In Nebraska negotiated cash trade has been at a standstill. Last week in Nebraska live FOB purchases at 190.00, dressed delivered purchases traded from 298.00-300.00. Last week in in the Western Cornbelt live FOB purchases at 190.00, with a few up to 191.00, dressed delivered purchases traded at 300.00, with a few up to 306.00.
The USDA is indicating cash trades for live cattle from 187.00 – 192.00 and from 298.00 – 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, May 28, 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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