Cattle Markets Collapse

Ben DiCostanzo General Commentary

January Feeder Cattle opened below trendline support at 227.55 and fell apart. It made the high at 227.375 and broke down the entire shortened session to the low at 219.15. Settlement was near the low at 219.325. The Thanksgiving holiday shortened session left bulls with little to be thankful for as bearish traders had control of the price action from start to finish. The selling took price below support at 219.40 with settlement also below it. This keeps the pressure on bulls going into next week. Follow-through to the downside could see support tested at 217.375 and then 216.125. Support then comes in at 215.45. If price can reclaim resistance at 219.40, we could see a test of resistance at 220.875. If bulls can regain some control and force some short-covering, we could see resistance tested at 222.225 and then 223.55.

The Feeder Cattle Index fell and is at 225.24 as of 11/23/2023.

February Live Cattle opened lower, also through trendline support(175.55) and fell apart, trading to the low at 170.475.  It consolidated and settled near the low at 170.975. The high was at 175.25. Bearish traders came to play while bulls digested their turkey and stuffing and couldn’t counter. The shortened session took price below the rising 200-DMA at 173.725 and then the previous all-time high for the lead contract at 172.75. It stalled just above support at 170.375 as bulls were able to stop the bleeding. The collapse in the futures market did little to the cash market as it maintained its footing, trading from 175.00 to 178.00 on a live basis on Friday. Trading on a dressed basis did establish a new low for the week at 275.00. It traded as high at 280.00. The average price should continue its downward trend of the past couple of weeks. Once again bulls lost control of the market from the start to late morning where they were able to get a slight bounce and give them some hope for next week. Exports once again came in weak, with sales foe 2023 at 10,000 mt and 4,400 mt for 2024. Cutouts are also showing weakness, even with a positive day on Friday. If settlement holds, we could test the old high at 172.75. Continued confidence could see price test resistance at the 200-DMA and then 174.425. A break below the low could see support tested at 170.375. A failure from here could see support tested at 168.625.

Boxed beef cutouts were higher as choice cutouts increased 1.03 to 298.03 and select increased 1.14 to 268.76. The choice/ select spread narrowed and is at 29.77 and the load count was 57.

Friday’s estimated slaughter is 118,000, which is below last week’s 121,000 and above last year’s 116,000. Saturday slaughter is expected to be 38,000, which is above last week’s 20,000 and below last year’s 87,000. The estimated total for the week (so far) is 538,000, which is below last week’s 636,000 and last year’s 589,000.

The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains negotiated cash trading has been at a standstill. The last reported market was on Wednesday with live FOB purchases at 177.00. In Nebraska and Western Cornbelt negotiated cash trading has been light on light demand. In Nebraska, compared to the last reported market on Wednesday, dressed delivered purchases traded 5.00 lower at 275.00. Not enough live FOB purchases for a market trend. Last week live FOB purchases traded at 178.00. In the Western Cornbelt a few live FOB and dressed delivered purchases traded at 177.00 and 278.00, however, not enough for a market trend. Wednesday was the last reported live FOB market from 177.00-178.00. The last reported dressed delivered market was last week with purchases at 282.00.

The USDA is indicating cash trades for live cattle from 174.00 – 178.00 and from 278.00 – 288.00 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 28, 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.

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**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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Fax: 312.256.0109

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