August Feeder Cattle opened higher, down ticked to the low at 255.50 and then rallied to the session high at 259.40. This was accomplished by mid-morning and price drifted the rest of the session settling at 258.65. The surge took price past resistance at 257.925 and the short-term moving averages. This puts futures on stronger ground especially with the Feeder Index making a new high for its recent up move. The index is just short of its all-time high set in September at 254.10 and looks like it may surpass it. A failure from 257.925 could see price test support at the flattening 8-DMA now at 256.075. Support then comes in at 254.30. If price holds settlement, it could move towards resistance at 261.05.
The Feeder Cattle Index increased and is at 252.82 as of 06/07/2024.
August Live Cattle opened higher at the low of the day (177.575) and rallied the rest of the session to the high at 180.15. It settled near the high at 179.975. Futures traders took cattle higher to start the week as cash prices ended last week stronger than anticipated in my opinion. Slaughter numbers were good in light of the tightening supply and we are lucky weights are high keeping production up to help keep beef flowing to the public. I see beef demand remain strong as retailers were featuring beef. I was in Costco on Sunday and I saw consumers buying beef, chicken and pork in healthy numbers. Ribeye’s were featured and they were $1 per pound cheaper in Costco than they have been and the local grocery had it at $9.99 per pound. The sale ends Tuesday. I point this out because there are worries that beef demand will struggle with higher average prices but at least in the Chicago area, beef prices are competitive and from what I saw people were in buying mode. Father’s Day is coming up and we will likely see more features for beef. We are in grilling season and I believe demand will hold out in grocery stores as cutouts are in the new reasonable price range, in my opinion. Independence Day is just around the corner and with cattle supplies slipping, I believe packers will have to remain aggressive in procuring cattle. Load counts have been what I call normal so packers have orders to fill and they are demanding cattle have some heft to assist in production because of the decline in numbers. We’ll see!… The rally took price past resistance at 179.40and puts the rising 100-DMA now at 180.70 in traders’ sights. Resistance then comes in at 181.175. A pullback below 179.40 could see price test support at the rising 21-DMA now at 178.95. Support then comes in at the flattening 8-DMA now at 178.525. A push past here and we test support at 178.10.
Boxed beef cutouts were mixed as choice cutouts increased 0.67 to 317.42 and select down ticked 0.10 to 301.04. The choice/ select spread widened and is at 16.38 and the load count was 109.
Monday’s estimated slaughter is 121,000, which is above last week’s 120,000 and below last year’s 122,718.
The USDA report LM_Ct131 states: Thus far for Monday in all trading regions negotiated cash trade has been at a standstill. Last week in the Southern Plains live FOB purchases traded at 185.00. Last week in Nebraska live FOB purchases traded at 190.00, while dressed delivered purchases traded at 301.00. Last week in the Western Cornbelt live FOB purchases traded from 190.00-193.00, while dressed delivered purchases traded at 301.00 on a light test.
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, June 11, 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
888.391.7894
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