March Feeder Cattle consolidated within the Thursday range as traders awaited the looming Cattle on feed Report due out after the close. The Friday high came in at 233.35, the low at 231.525 and settlement was at 231.95. Thursday’s breakout rally took price past the 38.2% retracement (230.35) of the all-time high at 264.675 to the 209.15 low from December 4th on the continuous chart. Friday’s action was another day above the retracement. If price can take out the Thursday High (233.45), we could see price test resistance at 234.475. Panicked shorts could then send price towards resistance at 235.95 and then the 50% retracement at 236.90. The 100-DMA is declining. It is now at 237.55. The 200-DMA is at 237.05. Will the 100 cross below the 200? This area should be strong resistance. A failure from settlement could see support tested at 231.175, the 38.2% retracement, 229.825 and then the rising 8-DMA 228.60.
The Feeder Cattle Index down ticked and is at 227.26 as of 01/18/2024.
April Live Cattle also consolidated in the upper end of its Thursday range. The high was at 177.875, the low at 176.925 and settlement came in at 177.375. With April the lead contract on the continuous chart, the rally on Thursday took price past the 50% retracement of the 192.05 all-time high and the 162.40 low on December 7th at 177.225. Today’s action kept price above the 50% retracement as traders basically sat on their hands waiting for cash to trade and the Cattle on Feed Report. On the cash front, Packers low-balled producers early but were more aggressive trying to buy cattle as the day wore on. Cattle traded from 172.00 – 175.00 on a live basis and from 272.00 – 277.00 on a dressed basis on Friday with packers paying up late to buy cattle before the report. The Cattle on Feed report came out after the close and the actuals basically came in line with estimates. Estimates were for the on feed to show 102.1%, Placements at 95.41% and marketings at 99.31%. See below for the summary from the report. With the report (in my opinion) neutral, I believe traders will react to the Friday cash trade and expectations for cash for next week. Futures are at (in my opinion) a crossroad. It is just above the 50% retracement and below resistance at 178.10 and the declining 100-DMA at 178.35. It will take a strong belief in the ability of cash to trade higher to overcome resistance. If futures can overcome the 100-DMA, we could test resistance at 179.40. The 61.8% retracement is next at 180.725. If futures pullback below the 50% retracement level, it could test support at 175.95. The rising 200-DMA is nearby at 175.15. Support then comes in at 174.425.
Boxed beef cutouts were lower as choice cutouts decreased 0.79 to 296.50 and select decreased 0.71 to 283.05. The choice/ select spread narrowed and is at 12.45 and the load count was 111.
Friday’s estimated slaughter is 121,000, which is above last week’s 105,000 and below last year’s 124,048. Saturday slaughter is expected to be 34,000, which is above last week’s 17,000 and last year’s 28,767. The estimated total for the week (so far) is 617,000, which is above last week’s 546,000 and below last year’s 647,262.
The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains and region negotiated cash trade has been at standstill. In the Western Cornbelt and Nebraska negotiated cash trade was slow on light demand, however not enough purchases for a market trend. Last week in the Southern Plains live FOB purchases traded at 172.00. In Nebraska live FOB purchases traded at 173.00 and dressed delivered purchases from 272.00-275.00. In the Western Cornbelt live FOB purchases traded at 175.00 and dressed delivered purchases at 275.00.
The USDA is indicating cash trades for live cattle from 172.00.00 – 175.00 and from 272.00 – 277.00 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 January 1, 2024. The inventory was 2 percent above January 1, 2023. The inventory included 7.20 million steers and steer calves, up 2 percent from the previous year. This group accounted for 60 percent of the total inventory. Heifers and heifer calves accounted for 4.74 million head, up 2 percent from 2023.
Placements in feedlots during December totaled 1.70 million head, 4 percent below 2022. Net placements were 1.64 million head. During December, placements of cattle and calves weighing less than 600 pounds were 440,000 head, 600-699 pounds were 410,000 head, 700-799 pounds were 380,000 head, 800-899 pounds were 279,000 head, 900-999 pounds were 110,000 head, and 1,000 pounds and greater were 85,000 head.
Marketings of fed cattle during December totaled 1.73 million head, 1 percent below 2022.
Other disappearance totaled 60,000 head during December, 11 percent above 2022.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 23, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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