May Feeder Cattle is now the lead contract as its volume has exceeded the volume of the April contract. Feeders broke down hard on Friday as liquidation in front of the looming Cattle on Feed report took place. Traders feared a bearish report and a bearish report is what they received. The breakdown in futures took price from the session high at 258.30 to the low at 252.50. It settled near the low at 253.775. The breakdown took price below the key level at 257.925 through support at 254.30 and stopping just above the 252.35 support level. Settlement was below the key level at 254.30. The breakdown keeps Feeders in its consolidation band from 260.80 to 250.775. There wasn’t any real damage to the continuous chart other than putting it in the lower end of the trading range. (Same thing when looking at the May chart itself – It is in the lower end of that range). The COF had higher placements than expectations and this could put some more pressure on futures at the open. Average expectations were for placements to be at 106.4% of last year and they came in at 109.7%. Marketings and on feed numbers were near expectations. The breakdown on Friday could limit any further decline on Monday as the futures did fall hard on Friday. Traders may have knocked prices down enough. We’ll see!… If futures fail from settlement, we could test support at 252.35 and then 251.50. Support then comes in at 248.85. If futures regain resistance at 254.30, it could approach resistance at 257.925.
The Feeder Cattle Index increased and is at 251.82 as of 03/20/2024. Friday’s number hasn’t come out as I write.
June Live Cattle broke down hard on Friday, trading from the high at 184.65 to the low at 182.525. Settlement was near the low at 182.90. The breakdown took price from the key level at 184.35 down to support at 182.575. Cash trade continued to impress this week as live cattle traded as high as 193.00 and dressed cattle reached 310.00. Traders, however, weren’t impressed. They smacked the futures in front of the Cattle on Feed report showing disdain for the aggressive packer buying in front of the same report. Are traders guessing that cash prices are peaking early??? The COF did come in with higher placements than expected but packers were buying cattle at higher prices. The average will likely top the highest all-time average price, but futures traders still sold cattle. Cutouts were weak and weights are rising anti-seasonally, so the likely outlook traders have is not a positive one. Monday may see a lower opening ad packers will likely try to find some low-lying fruit to signify a top in cash. We’ll see!… In my opinion, packers don’t pay more than they have too. They are looking for more weight to be put on cattle and are paying for it. I think the bullish run for futures is not over and will find a bottom sooner rather than later. Grilling season is coming and after a pause we could see cutouts resume higher and I think packers still need to buy cattle. If futures fail from settlement, it could re-test support at 182.575. Support then comes in at 181.70. If futures hold settlement, it could revisit resistance at 184.35. Resistance than comes in at 185.75.
Boxed beef cutouts were lower as choice cutouts fell 3.01 to 310.72 and select dropped 2.26 to 301.47. The choice/ select spread narrowed and is at 9.25 and the load count was 85.
Friday’s estimated slaughter is 109,000, which is below last week’s 113,000 and last year’s 108,798. Saturday slaughter is expected to be 14,000, which is below last week’s 15,000 and above last year’s 14,772. The estimated total for the week (so far) is 598,000, which is below last week’s 601,000 and last year’s 627,444.
The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains negotiated cash has been at a standstill. The most recent market in the Southern Plains was Thursday with live FOB purchase at 188.00. In Nebraska and the Western Cornbelt negotiated cash has been slow on light demand. The most recent market in Nebraska was Thursday with live FOB purchases at 190.00, with a few purchases up to 191.00, and delivered purchases at 302.00. The most recent market in the Western Cornbelt was Thursday with live FOB purchases from 190.00-191.00, with a few purchases up to 191.50, and dressed delivered purchases at 302.00.
The USDA is indicating cash trades for live cattle from 186.00 – 193.00 and from 298.00 – 310.00 on a dressed basis (so far).
United States Cattle on Feed Up 1 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 11.8 million head on March 1, 2024. The inventory was 1 percent above March 1, 2023.
Placements in feedlots during February totaled 1.89 million head, 10 percent above 2023. Placements were the highest for February since the series began in 1996. Net placements were 1.83 million head. During February, placements of cattle and calves weighing less than 600 pounds were 360,000 head, 600-699 pounds were 330,000 head, 700-799 pounds were 515,000 head, 800-899 pounds were 485,000 head, 900-999 pounds were 150,000 head, and 1,000 pounds and greater were 50,000 head.
Marketings of fed cattle during February totaled 1.79 million head, 3 percent above 2023.
Other disappearance totaled 56,000 head during February, 3 percent below 2023.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, March 26, 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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