Cattle Markets Sink

Ben DiCostanzo General Commentary

January Feeder Cattle continued its fall from grace, dropping to a new low for the down move at 212.125. It settled near the low at 212.80 and made the high at 220.775. Bears maintained control of the market after Friday’s holiday market destruction. This is with corn weakness and the cash index stable. In fact, we are now 17.58 handles below the index with the jump in the index on Monday. In my opinion, Feeders are oversold and we are nearing month-end so some profit-taking may occur. The breakdown took price to support at 212.15 and it held (so far) with settlement above it. A breakdown below 212.15 could see support tested at 210.30 and then 208.425. If price can hold settlement, we could see a test of resistance at 213.20 and then 214.55. If bulls can regain some control and force some short-covering, we could see resistance tested at 215.45 and then 216.125.

The Feeder Cattle Index surged and is at 230.38 as of 11/24/2023.

February Live Cattle made an early attempt at a rally, trading up to the high at 172.525 and then following Feeders lower, making the low at 168.625. It settled near the low at 168.825. The rally stalled just below the previous all-time high for the lead contract at 172.75. The breakdown took price below support at 170.375 and it stopped right on support at 168.625. The breakdown sets up packers to look for lower prices for this week. We will see where they try to establish the price and they likely will try early in the week with the follow-through to the downside on Monday. Cutouts are hovering just below the 300.00 mark and could go lower as retailers are also watching the futures market. They have not been aggressive in chasing after beef, which could indicate demand concerns on their end of the business. If cutouts head down, they may be able to feature beef and keep the chains moving. If settlement holds, we could test resistance at 170.375. A stronger recovery could see price bounce back to the Monday high and test the 172.75 resistance level. A break below the low could see support tested at 166.975. A failure from here could see support tested at 164.90.

Boxed beef cutouts were lower as choice cutouts decreased 0.78 to 297.25 and select decreased 0.96 to 267.80. The choice/ select spread widened and is at 29.45 and the load count was 106.

Monday’s estimated slaughter is 123,000, which is below last week’s 125,000 and last year’s 127,000.

The USDA report LM_Ct131 states: Thus far for Monday in the Texas Panhandle negotiated cash trading has been limited on light demand. In Kansas negotiated cash trading has been mostly inactive with light demand. In both regions, a few live FOB purchases traded at 175.00. However, not enough purchases for a market trend. Last week in the Southern Plains live FOB purchases traded at 177.00. In Nebraska negotiated cash trading has been at a standstill. Last week live FOB purchases, on a very light test, traded at 176.00 and dressed delivered purchases traded mostly at 280.00. In the Western Cornbelt negotiated cash trading has been limited on light demand. A few live FOB purchases traded at 175.00. However, not enough purchases for a market trend. Last week live FOB purchases traded from 175.00-178.00 and dressed delivered purchases traded from 278.00-280.00.

The USDA is indicating cash trades for live cattle at 175.00 and nothing on a dressed basis (so far).

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, November 28, 2023, 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.

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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

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