Cattle Markets Consolidate in Front of Cattle on Feed Report

Ben DiCostanzoGeneral Commentary

January Feeder Cattle rebounded after opening lower and trading to the session low at 225.775. The bounce took price to the high of the day at 229.70 and then pulling back and consolidating the rest of the session. It settled in the upper end of the range at 228.50. Traders lightened positions in front of the Cattle on Feed report which is released after the close. The initial breakdown took price to just above support at 225.675 and the bounce stopped just shy of resistance at 229.825. Settlement was above the key level at 228.05. A breakdown from 228.05 could see support revisited at 226.925 and then 225.675. Support then comes in at 224.475 and 223.55. If settlement holds, resistance could be re-tested at 229.825. A bigger bounce could see resistance tested at 231.175 and then the rising 200-DMA now at 231.225.

The Feeder Cattle Index down ticked and is at 228.64 as of 11/16/2023.

February Live Cattle opened lower, dipped to the low at 174.825 and then recovered, trading to the high at 177.40. Trade was done by mi-morning as price pulled back and consolidated the rest of the session and settled near the high at 176.80. The breakdown took price just below the rising trendline support at 175.175. The rally took price into the upper end of Thursday’s breakdown candle. Price basically consolidated in front of Friday’s Cattle on Feed report out after the close of futures trading. Thursday’s crash was possibly a result of outside market weakness, indicating demand worries on a weakening economy, lousy export sales and rumors of a hack on Tyson leading some to believe a short-term back up of cattle. I haven’t seen anything from Tyson on this matter but maybe some of Thursday’s cash market weakness also was producer fear of the hack. The cattle market’s recent weakness was due in part to guesses announced last week that the Cattle on Feed Report would be bearish as placements were talked up and expected to be 106 – 107% of last year’s placements. Last year’s placements were extremely low so placements this year, in my opinion would need to be extremely high to compensate for the low placements last year in order to be bearish to cattle. My view of the report (see below) is that it will be considered bullish, especially after the decline we have seen in the cash and futures markets. If futures can hold settlement, a test of the 178.10 resistance level is possible. Resistance then comes in at the declining 13-DMA now at 178.675. A failure below the rising trendline (on Monday it will be at 175.30) could see price test support at 174.425. The rising 200-DMA now at 173.50 is the next level to test. Support then comes in at the old all-time high at 172.75.

Boxed beef cutouts were mixed as choice cutouts decreased 0.85 to 293.87 and select surged 3.05 to 270.70. The choice/ select spread narrowed and is at 23.17 and the load count was 85.

Friday’s estimated slaughter is 121,000, which is above last week’s 114,000 and below last year’s 124,000. Saturday slaughter is expected to be 20,000, which is above last week’s 11,000 and below last year’s 35,000. The estimated total for the week (so far) is 636,000, which is above last week’s 618,000 and below last year’s 672,000.

The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains negotiated cash trade was mostly inactive on light demand. The most recent market in the Texas Panhandle was Thursday with live FOB purchases traded at 178.00. The most recent market in Kansas was Thursday with live FOB purchases traded at 178.00. In Nebraska and the Western Cornbelt negotiated cash trading cash trading was limited on light demand. The most recent market in Nebraska was Thursday with live FOB purchases traded at 178.00. The most recent market was Thursday dressed delivered was Wednesday at 282.00. The most recent market in the Western Cornbelt was Thursday with live FOB purchases traded at 178.00. The most recent market in the Western Cornbelt was Thursday with dressed delivered purchases traded at 282.00.

The USDA is indicating cash trades for live cattle from 175.00 – 181.00 and from 278.00 – 282.00 on a dressed basis (so far).

United States Cattle on Feed Up 2 Percent

Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.9 million head on November 1, 2023. The inventory was 2 percent above November 1, 2022.

Placements in feedlots during October totaled 2.16 million head, 4 percent above 2022. Net placements were 2.11 million head. During October, placements of cattle and calves weighing less than 600 pounds were 550,000 head, 600-699 pounds were 470,000 head, 700-799 pounds were 465,000 head, 800-899 pounds were 394,000 head, 900-999 pounds were 205,000 head, and 1,000 pounds and greater were 80,000 head.

Marketings of fed cattle during October totaled 1.76 million head, 3 percent below 2022.

Other disappearance totaled 55,000 head during October, 2 percent above 2022.

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, November 21, 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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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163


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