September Feeder Cattle gap opened lower and crashed. The panic built quickly, taking price down limit to the low at 238.90 in the first minute of trading. It didn’t stay there long as price quickly surged, trading up to the session high at 244.15. The rally couldn’t quite close the gap, leaving a tiny gap from the Friday low at 244.20 to the Monday high. The breakdown took price below the 200-DMA now at 244.50 and support at 242.475, 240.875 and stopping because of the limit just above support at 238.35. The rally found resistance just below the Friday low and collapsed and approached limit down yet again. It was able to hold and it limped higher into the close to settle at 241.25. Closing below the 200-DMA and leaving a small gap keeps bears in control of the market but, the session formed a small bodied candlestick which indicates indecision in the market. The price action down has been all about outside market breakdown as the equity markets have been pummeled as traders are begging the fed to lower interest rates as the economy shows signs of weakness. Price didn’t settle down limit so we will have regular limits on Tuesday. Futures are well below the Feeder Index but there looks like cash sales for Feeder weight cattle took a plunge on Monday which should lead to a decline in the index in the coming days. If price can’t hold settlement, we could re-test support at 240.875 and then move towards support at 238.35. If it holds settlement, it could test resistance at 242.475 and move towards resistance at the gap and the 200-DMA.
The Feeder Cattle Index decreased and is at 256.55 as of 08/02/2024.
October Live Cattle gap opened lower and raced to the low of the day at 176.35 during the first minute of trading. The market quickly rebounded and it rallied into late morning to the high of the day at 180.50, closing the gap in the process. It reversed course yet again and traded lower to settle at 179.00. The open saw price below the 200-DMA at 179.20 and it took out support at 178.10 and stopped just shy of support at 175.95 as it rebounded and settled below the 200-DMA. Settlement below the 200-DMA puts bears in control of the market, in my opinion as the rally to the high took price up to the 100-DMA now at 180.45 as it held back the rally and bears took it back below the 200-DMA. Outside market influence is dominating sentiment in the cattle markets as Equity markets are under pressure as traders are in fear of a coming recession (if it’s not already here) and are crying out for a cut in rates. The weakening economic data is believed to be sapping consumer confidence and traders let cattle futures have over the past few sessions. Cattle futures prices are near all-time highs and traders don’t think this can last even as cutout prices remain strong in the wake of the equity markets collapse. The strength in the cutouts could be why we didn’t see price waste away and settle near the low. So far cash fundamentals are still strong and producers aren’t going to panic if cutouts stay strong, in my opinion. We’ll see!… If price can get above the 200-DMA, it could test resistance at the 100-DMA and then resistance at 181.175. If price can’t hold settlement, it could test support at 175.75. Support then comes in at 174.425.
Boxed beef cutouts were higher as choice cutouts surged 4.17 to 317.94 and select jumped 2.89 to 300.06. The choice/ select spread widened and is at 17.88 and the load count was 93.
Monday’s estimated slaughter is 119,000, which is above last week’s 115,000 and below last year’s 122,512.
The USDA report LM_Ct131 states: Thus far for Monday in the Southern Plains and Nebraska negotiated cash trading has been at a standstill. In the Western Cornbelt negotiated cash trade has been mostly inactive on very light demand. Last week in the Texas Panhandle live FOB purchases traded at 188.00. In Kansas last week live FOB purchases traded from 188.00-195.00. In Nebraska last week live FOB purchases traded at 196.00 while dressed delivered purchases traded at 310.00. Last week in the Western Cornbelt live FOB purchases traded from 194.00-196.00, while dressed delivered purchases traded at 310.00.
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, August 06, 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.
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