January Feeder Cattle gap opened higher and raced to the high of the day at 232.20. It fell apart, closing the gap and broke down to the low at 227.45. It worked higher the rest of the session and settled in the upper middle of the range at 229.85. The opening rally was a relief rally in my opinion that the Cattle on Feed Report wasn’t as bad as expected. The relief lasted about 5-minutes and the breakdown to around 10:15AM. Hope for better days ahead took price into the middle of the range. The rally sent price above resistance at 231.175 and the rising 200-DMA now at 231.425. This proved once again to be strong resistance and price then raced through support at 229.825 and then 228.05. It was able to find some footing and ended up a tick above the key 229.825 level. A breakdown from settlement could see support revisited at 228.05 and then 226.925. If settlement holds, we could retest the 200-DMA. A bigger bounce could see resistance tested at 233.10.
February Live Cattle gap opened higher, surged to the high at 178.725 and the also closed its gap on its way to the low at 175.70. It limped into the close and settled at 176.65. This time it was sell the rumor and buy the fact as traders were relieved the report didn’t match the estimates on placements. The race to the high was quick and the decline took a little longer, but trade was basically finished by around 10: 10 AM. It couldn’t get anything going yet the deferred contracts fared better than the lead two contracts. Cutouts are still relatively weak and with a short week to trade cash, it is likely believed that packers will hold the line on cash. The positive aspects of the report took price to just past resistance at 178.10 and the declining 13-DMA now at 178.125. This proved to be too tough for pulls to control and the drop took price down through support at 175.95. It was able to settle above support so that is positive. If settlement holds, we could revisit the Monday high. Resistance then comes in at the declining 21-DMA now at 179.225 and then 179.40. Trendline resistance is at 180.35. A break below the low has trendline support at 175.50. A failure from here could see support tested at 174.425.
Boxed beef cutouts were higher as choice cutouts increased 1.88 to 295.75 and select increased 0.25 to 270.95. The choice/ select spread widened and is at 24.80 and the load count was 135.
Monday’s estimated slaughter is 125,000, which is even with last week and below last year’s 130,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in all regions. The most recent purchase market was for the prior week. In all regions live FOB purchases traded mostly at 178.00. In Nebraska and Western Cornbelt dressed delivered purchases traded at 2820.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
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