April Feeder Cattle opened lower, traded to the high of the day at 255.60 and the fell apart. It broke down over 3 handles to the low at 251.975. It tried to rally back, but stalled and settled at 253.725. The breakdown took price below support at the rising 13-DMA at 252.475 and the key level at 252.35. The bounce and settlement above these levels shows a successful test of support, in my opinion. It held but couldn’t reclaim the key level at 254.30. The initial rally failed just above the rising 8-DMA now at 255.175. This could be month end profit taking with February coming to a close. The futures remain strong to the index, indicating traders see the cash market rallying into March. If futures can reclaim resistance at 254.30, it could re-test resistance at the rising 8-DMA. Resistance then comes in at 257.925. A failure below settlement could see support re-tested and then 251.30. If 251.30 fails to contain the selling, price could test support at the rising 21-DMA now at 249.625.
The Feeder Cattle Index decreased and is at 246.26 as of 02/28/2024.
April Live Cattle opened lower and broke down to its low at 184.475. It recovered and rallied to the high at 186.475. It couldn’t sustain the success and fell back to settle at 185.35. I believe the lower trade was also on profit taking due to month end. The breakdown in Live Cattle took price below the rising 21-DMA now at 185.70 to just above support at 184.35. Settlement was just below the 21-DMA so that is somewhat negative going into Friday’s trade. Cutouts are grinding higher which in my opinion gives producers some ammunition to hold out for higher prices. Cash has traded mostly steady this week, but on a positive note, with futures showing some weakness saw we cash trade as high as 184.00 on Thursday. Slaughter was at decent levels but is expected to slow on Friday and be non-existent on Saturday, in my opinion. Talk this week is for slaughter to be between 580,000 – 590,000. We’ll see…. This is expected to continue as cattle numbers are declining and packers want to make up for it with heavier cattle to help production. If futures can reclaim resistance at 185.75, it could test resistance the sliding 13-DMA at 186.575 and the 8-DMA at 187.15. Resistance then comes in at 187.725. If futures fail from settlement, it could revisit the Thursday low. Support then comes in at the rising trendline at 183.90.
Boxed beef cutouts were higher as choice cutouts increased 1.17 to 304.20 and select increased 1.24 to 294.18. The choice/ select spread narrowed and is at 10.02 and the load count was 130.
Thursday’s estimated slaughter is 123,000, which is even with last week and below last year’s 124,375. The estimated total for the week (so far) is 495,000, which is above last week’s 472,000 and below last year’s 499,466.
The USDA report LM_Ct131 states: Thus far for Thursday in the Southern Plains negotiated cash trade has been slow on light demand. The most recent market in Southern Plains was Wednesday with live FOB purchases traded at 183.00. In Nebraska negotiated cash trade was slow on moderate demand. Compared to Wednesday live FOB purchases traded steady at 183.00. Compared to last week dressed delivered purchases traded 2.00 lower at 290.00. In the Western Cornbelt negotiated cash trade and demand was moderate. Compared to last week live FOB purchases traded steady to 1.00 higher from 183.00 -184.00. Compared to last week dressed delivered purchases traded steady to 2.00 lower from 290.00.
The USDA is indicating cash trades for live cattle from 180.00 – 184.00 and from 288.00 – 290.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, March 27, 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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