For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 28, 2024, at 3:15 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.
March Feeder Cattle opened higher and turned lower, trading down to the low at 271.825. With the cattle on feed report out on Friday some consolidation initially took place early in the session. The bullishness in the Feeders couldn’t be contained however and price rallied to the high at 274.65. This is a new all-time high for the lead futures contract on the continuous chart based on volume. Price settled near the high at 274.075. The new high comes about after the Feeder Index made a new all-time high on Monday at 278.92 and has since dipped lower. The March contract narrowed the premium the index has over the futures. Whereas when the futures contract was making its all-time high at the end of May at 264.95 and trading around 16 handles above the index, we are now at a consistent discount to the index. The rally we have seen over the last 2 sessions have narrowed the discount considerably. With record fund longs in the market, it is interesting to see the inability of the futures contract to surpass the index. The past rallies in the last year or so had usually taken futures well above the index. With the futures and index so close to the 300.00 level, traders may not want to get ahead of the cash market as it did before, simply because those premiums were usually wiped out as the futures pulled back hard towards the cash market. This may stabilize futures and keep the cash market in somewhat comfortable place going forward. This may be able to limit the pullbacks in futures if the cash is able to maintain its strength. We’ll see!… With the lead contract at all-time highs, pivots are where we will highlight resistance. If price holds settlement, it could test resistance at the daily R1 at 275.39, R2 is at 276.43 and R3 at 278.21. A breakdown from settlement could see a test of support at 271.00. Support then comes in at 269.00.
The Feeder Cattle Index decreased and is at 277.55 as of 01/22/2025.
April Live Cattle is now the lead contract on the continuous chart as its volume has surpassed the volume of the February contract. It opened lower and traded down to the session low at 199.175. The weaker open is attributed in my opinion to the cattle on feed report due out after the close on Friday and simply because we made a new all-time high on Wednesday at 199.875 and the market took the early trade to take that in. It was also close to the magical 200.00 level and traders were cautious. Well, the cautious traders were kicked out and aggressive traders came aboard and took price to yet another all-time high for the lead contract at 200.90. A pullback and a test of yesterday’s high ensued and then price resumed its rally to settle at an all-time high for the lead contract at 200.725. The excitement in the futures comes as funds continue to build their long positions, in my opinion as the cash market continues to astound, reaching another all-time high on Thursday at 207.00. Cash has been king, and as more analysts say the packer is caught up with their cattle purchases, the packer continues to say maybe that is not the case as they continue to compete for cattle and pay record prices. I do not believe they would be that aggressive if they had enough cattle under their control. As producers like to tell me the packer doesn’t pay more than he has too. It looks like he has too. We have the Cattle on Feed report out after the close on Friday and estimates are for the on feed to be at 99.7%, placements at 101.1% and marketings at 101.1%. Cutouts have been strong even though they are just off their recent highs which has helped the packer but will the retail industry up the price on their products for the consumer? The retail price has been setting records in 2024 and now possibly in 2025. Will the consumer be able to afford the beef? We’ll see!… If price can’t hold settlement, it could test the support at 199.10. If settlement holds, we could see price make new highs and we could have resistance at the pivot R1 at 201.45, R2 at 202.04 and R3 comes in at 203.18.
Boxed beef cutouts were lower as choice cutouts decreased 1.06 to 330.96 and select declined 0.78 to 317.21. The choice/ select spread narrowed and is 13.75 and the load count was 163.
Thursday’s estimated slaughter is 123,000, which is above last week’s 122,000 and below last year’s 126,091. The estimated total for the week(so far) is 486,000, which is below last week’s 488,000 and above last year’s 487,658.
The USDA report LM_Ct131 states: Thus far for Thursday negotiated cash trading has been mostly inactive on light demand in all regions. Not enough purchases for a market trend in any region. In the Texas Panhandle, last week live FOB purchases traded at 201.00. The last established market in Kansas was Tuesday with live FOB purchases trading at 201.00. The most recent reported market in Nebraska and the Western Cornbelt was last week. In Nebraska, live FOB and dressed delivered purchases traded from 203.00 -205.00 and at 322.00, respectively. In the Western Cornbelt, live FOB and dressed purchases traded from 203.00-206.00 and from 320.00-322.00, respectively.
The USDA is indicating cash trades for live cattle from 201.00 – 207.00 and from 320.00 – 322.00 on a dressed basis (so far).
**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
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