May Feeder Cattle was pummeled on Monday as the first reported case of a human contracting Bird Flu made its way over the internet. The case was located in Texas as the patient became ill following contact with dairy cows that were presumed to have been sick with the virus. Feeders broke down hard late in the session on Monday, trading down to 240.85 after making the high early in the session at 251.30. Settlement was at 242.675. The breakdown took price through support at the 200-DMA now at 242.475 and the key levels at 242.475 and 240.875. The recovery at the end of the day saw settlement just above the 200-DMA. If futures fail from settlement, we could re-test support at 240.875. If support fails, we could see price break down and test the 238.35 support level. If futures hold settlement, it could test resistance at 245.75. Resistance then comes in at 248.85.
The Feeder Cattle Index increased and is at 247.67 as of 03/29/2024.
June Live Cattle also got whacked as the trading community doesn’t like the uncertainty created from the dairy cow bird flu illnesses. There were three states (Texas, Kansas and Michigan) with confirmed cases and two (New Mexico and Idaho) with suspected cases. Minnesota showed a goat contracting the bird flu. The fear for today was Texas reporting a dairy employee got sick from working with infected dairy cows. The cutouts broke down with low demand (load counts were low) as grocers paused and reflected on the reports. The USDA however has said the dairy cows have recovered from the disease and the only issue has been lower milk production from the cows while they were ill. They have also said the potential for human sickness is small. That wasn’t enough for traders, especially after Texas stated the worker was sick with bird flu. They smacked the futures, taking futures from the high at 181.125 to the low at 174.15. This creates more technical damage to the charts as the Monday candle formed an outside day down, with the negative close. The high was just below the key level at 181.175 and the low pushed past support at 174.425 with the market settling above it at 175.325. Bulls have a lot of work to do to get this market back in gear. Fear overwhelmed the market, and it would probably take some definitive proof that the bird flu is not dangerous to cattle and to human beings to mitigate the fear. Time will reveal the nature of the disease and its effects on the beef market. Packers did bid up the cash market on Friday after rumors were circulating that the bird flu infected a human. They didn’t seem too worried about it on Friday but trade this week will likely take place later in the week as both sides figure out the repercussions from the ongoing research into the disease and its transmissibility to others. If futures fail from settlement, it could re-test support at 174.425. Support then comes in at 172.75. If futures hold settlement, it could test resistance at 175.95. Resistance than comes in at 178.10.
Boxed beef cutouts were lower as choice cutouts decreased 0.98 to 305.74 and select decreased 1.64 to 301.79. The choice/ select spread narrowed and is at 3.95 and the load count was 77.
Monday’s estimated slaughter is 109,000, which is below last week’s 118,000 and last year’s 120,262.
The USDA report LM_Ct131 states: Thus far for Monday in all trading regions negotiated cash has been at a standstill. Last week in the Texas Panhandle live FOB purchases at 186.00. In Nebraska negotiated cash was mostly inactive on light demand. Last week in Kansas negotiated live FOB purchases traded from 185.00-186.00. Last week in Nebraska live FOB purchases traded from 189.00-190.00 and dressed delivered purchases from 299.00-302.00. Last week in the Western Cornbelt live FOB purchases traded from 188.00-190.00, dressed delivered purchases traded from 299.00-300.00, on a very light test.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, April 02, 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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