April Feeder Cattle opened lower and looked like it was going to collapse. It broke down below the short-term MA’s (8 @256.30 and 13 @ 255.725) and took out Wednesday’s low at 254.95. It wasn’t to be however, as price made the low at 254.50 which is just above support at 254.30. The market recovered and grinded higher to the high at 256.85. It settled near the high at 256.30. It settled above the 13-DMA and right on the 8-DMA. Feeders continue to consolidate, waiting in my opinion, for a bull run in the index. The index has stagnated between 246.38 and 247.10 but this afternoon showing so a jump in the index. Feedlots have been aggressive in buying cattle. They fear a diminishing number of feeder weight cattle. If futures can hold above the 8-DMA we could revisit the Monday high. Taking out the Monday could set futures on a course for the February 26th high at 260.80. Resistance is nearby at 261.05. A failure below settlement could see support tested at 254.30 and then the rising 21-DMA now at 252.60.
The Feeder Cattle Index increased and is at 248.07 as of 03/06/2024.
April Live Cattle opened unchanged and made the low at 186.95. It recovered and rallied the rest of the session to the high at 188.875. It settled near the high at 188.725. Rumors of packer aggression in paying up for cattle spurred the market higher. The mandatory report showed packers paid as high as 186.00 for cattle on Thursday. This is a new high for cash this year. Rumors were as circulating that they were paying up as high as 187.00 in South Dakota. Somehow this didn’t make the mandatory report. With packers cutting back on slaughter numbers, worries abounded that they would take price lower as they made producers nervous and willing sellers. This hasn’t taken place as the new high suggests. Packers don’t become aggressive on a Thursday if there are plenty of cattle, producers usually cave. So, there must be a less cattle out there for packers to bid on and to buy them they got aggressive. Cutouts are moving higher so they are having success on one end. The seasonality is coming where both cutouts and cash rally. It is starting early and when the seasonality was for weaker cash and cutouts it didn’t really occur. Prices were stable to higher. This indicates demand for beef is stable to strong and bodes well for the near-term which could take prices higher than many expect. We’ll see!! If futures can take out the February 22 high at 189.20, we could see a spurt to resistance at 190.075. The all-time high for the lead contract is next at 192.05. If futures fail from settlement, it could re-test support at 187.725. Support then comes in at the rising 21-DMA now at 186.75.
Boxed beef cutouts were higher as choice cutouts increased 1.70 to 306.61 and select increased 1.17 to 296.26. The choice/ select spread widened and is at 10.35 and the load count was 97.
Thursday’s estimated slaughter is 122,000, which is below last week’s 123,000 and last year’s 125,574. The estimated total for the week (so far) is 484,000, which is below last week’s 495,000 and last year’s 501,188.
The USDA report LM_Ct131 states: Thus far for Thursday in the Texas Panhandle negotiated cash trade has been at a standstill. In Kansas negotiated cash trade was slow on light to moderate demand. There have been a few early live FOB purchases at 186.00, however not enough purchases for a market trend. Last week in the Southern Plains live FOB purchases traded at 183.00. In Nebraska negotiated cash trade was slow on light to moderate demand. Compared to last week live FOB purchases traded 1.50-2.00 higher from 185.00-186.00. Last week in Nebraska dressed delivered purchases traded at 290.00. In the Western Cornbelt negotiated cash trade and demand has been moderate. Compared to last week in the Western Cornbelt live FOB purchases traded 2.00 higher from 185.00 -186.00. Last week in the Western Cornbelt dressed delivered purchases traded at 290.00.
The USDA is indicating cash trades for live cattle from 178.00 – 186.00 and from 290.00 – 292.00 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 12, 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
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