March Feeder Cattle opened lower and made the low of the day at 229.475. Price surged off the low, trading up to 233.45 for the high of the day. This all took place in the first 45 minutes of the session. Price had a pullback to 231.775 and then drifted the rest of the session to settle near the high at 232.55. The open and then the low was just below settlement and the key level at 229.825. The rally burst past resistance at 231.175 and stalled just above the 233.10 resistance level. Settlement was below resistance. The cash market was strong with the one day showing a huge jump in price, leading traders to hope the cash market will continue higher and making futures too cheap, in my opinion. This was a bullish breakout, in my opinion as price didn’t pull hard after its early rally. Even though it settled below resistance, it closed above the upper Bollinger Band, which could embolden bulls, in my opinion. If resistance at 233.10 is taken out, we could test the 234.475 resistance level. Resistance then comes in at 235.95. If price can’t hold settlement, we may pullback and consolidate in the upper end of Thursday’s trading range. If price breaks support at 231.175, we could revisit the Thursday low. Cattle on Feed is after the close, and after the Thursday rally, traders could be anxious and price could consolidate within the Thursday range.
The Feeder Cattle Index increased and is at 227.29 as of 01/17/2024.
April Live Cattle is now the lead contract as its volume has exceeded the volume of the February contract. It opened unchanged and traded to the low at 175.10. Price reversed course and rallied to the session high at 177.95 by the noon hour. It drifted the rest of the session and settled near the high at 177.65. The low was just above support at the rising 200-DMA on the continuous chart at 175.05. The rally to the high stalled just below resistance at 178.10 and the flattening 100-DMA at 178.40. This was a nice breakout which has bullish implications in my opinion. Cutouts have been strong as the bitter cold and snow has reduced slaughter putting upward pressure on the cutouts. Cash trade was on the sidelines until some light trading today on a live basis. We could have more bitter cold and snow into the weekend that may continue to performance and feedlots marketings. The Cattle on Feed report comes out after the close and estimates are for the on feed to show 102.1%, Placements at 95.41% and marketings at 99.31%. We could see some consolidation in front of the report. A pullback from settlement could see price test support at 175.95. A breakout above the 100-DMA could see price test resistance at 179.40.
Boxed beef cutouts were mixed as choice cutouts decreased 2.16 to 296.29 and select increased 0.74 to 283.76. The choice/ select spread narrowed and is at 12.53 and the load count was 144.
Thursday’s estimated slaughter is 121,000, which is above last week’s 120,000 and last year’s 119,316. The estimated total for the week (so far) is 462,000, which is above last week’s 424,000 and below last year’s 494,000.
The USDA report LM_Ct131 states: Thus far for Thursday in the Southern Plains and Nebraska region negotiated cash trade has been at standstill. In the Western Cornbelt negotiated cash trade has been mostly inactive on light demand. Last week in the Southern Plains live FOB purchases traded at 172.00. In Nebraska live FOB purchases traded at 173.00 and dressed delivered purchases from 272.00-275.00. In the Western Cornbelt live FOB purchases traded at 175.00 and dressed delivered purchases at 275.00.
The USDA is indicating cash trades for live cattle at 172.00.00 and at 273.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 23, 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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