August Live Cattle bounced back on Friday, approaching the Friday and Monday highs after the mid-week pullback took price down to its 173.425 low. Friday’s rally stalled at 177.20, just below Friday’s 177.25 high with settlement nearby at 177.00. The low was at 174.30. With low expectations for cash this week… traders took futures down after the July Fourth holiday. After stalling at the low on Thursday, futures came back, and cash started looking better as packers were forced to pay mostly steady to higher in the North for cattle. Excitement built on Friday with corn lower, Feeders responding with its own rebound in price and cash remained solid even with cutouts falling. This propelled cattle higher, in my opinion, and the strong settlement bodes well for next week. If futures can futures can overtake the Friday and Monday (177.35) highs, we could challenge the brand new all-time high established on June 7th at 178.10. Export sales were good with such high cutout prices so, in my opinion, so far demand remains solid all-around. Demand can stay strong if cutouts continue to work lower and consumer prices stay in a reasonable range as we head into the dog days of summer. I am a believer that consumers want to eat beef and are willing to pay a little more for it. It would be in the best interests of packers and vendors in the long run if they found a way to keep beef prices at reasonable levels. A failure to hold settlement could see a setback to support at 175.95. Support then comes in at 174.425.
Boxed beef cutouts were lower as choice cutouts fell 2.57 to 316.90 and select collapsed 4.34 to 285.63. The choice/ select spread widened and is at 31.27 and the load count was 134.
Friday’s estimated slaughter is 125,000, which is above last week’s 123,000 and below last year’s 126,000. Saturday slaughter is expected to be 78,000, which is above last year’s 22,000 and below last year’s 86,000. The estimated total for the week (so far) is 539,000, which is below last week’s 647,000 and last year’s 588,000.
The USDA report LM_Ct131 states: So far for Friday in Nebraska negotiated cash trading has been slow with light demand. Compared to last week live purchases, on a light test, traded steady 1.00 higher from 183.00-185.00, and dressed purchases, on a light test, traded steady at 290.00. In the Western Cornbelt negotiated cash trading has been slow on light to moderate demand. Live purchases, when compared to the last reported market on Thursday, traded steady to 4.00 higher from 183.00-184.00. Dressed purchases, when compared to last week, on a light test, traded steady at 290.00. In the Southern Plains negotiated cash trading has been limited on light demand. In the Texas Panhandle, a few, live purchases traded steady at 178.00, when compared to the last reported market on Thursday. In Kansas, not enough purchases for a market trend. The last reported market was on Thursday with live purchases at 178.00.
The USDA is showing cash trades for live cattle from 176.00 – 185.00 and from 288.00 – 292.00 on a dressed basis (so far).
August Feeder Cattle surged on Friday as corn prices fell, putting the bullish fever back into the Feeder market. It opened at the low (242.60) and rallied the rest of the session, reaching 245.775 for the high. It settled at 245.425. The high was just above resistance at 245.75, with settlement just below it. The rally closed the gap created from the low on July 5th at 244.35 and the July 6th high at 243.925. This could key price on Monday. A pullback from settlement could put us back into this area as lots of times gap closures lead to reversals back into the direction of the gap. Support then comes in at 242.475. If corn stays weak, we could see price jump above resistance and test resistance at the new all-time high at 248.85, established on July 5th.
The Feeder Cattle Index increased and is at 231.21 as of 7/06/2023.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, July 13, 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.
**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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