August Live Cattle traded both sides of unchanged as it laid in wait of the looming Cattle on Feed report. The report was released after the bell and saw placements come in higher than expected, with expectations for an increase in supply of 1.7% and the actual report showing an increase of 5%. Placements increased in each of the weight categories except for 9-weights, which declined 2.3% from year-ago. Drought was a factor based on where the placements increased but some of the increase was driven by larger imports of feeder cattle. The on-feed decrease marked the 10th straight month of year-over-year declines in feedlot inventories. While the placements suggest second-half supplies won’t be as tight as expected, feedlot numbers will continue to decline relative to year-ago. The Friday price action saw price trade from a low of 170.35 to its high at 171.625 and settling at 170.775. If price holds settlement, it could test resistance at the declining 13-DMA now at 171.95 and then the previous all-time high at 172.75. Resistance then comes in at 174.425. Support is nearby at the rising 21-DMA now at 170.625 and then at 170.325. A breakdown below here could see price test support at 168.625.
Boxed beef cutouts were lower as choice cutouts dipped 0.46 to 334.01 and select fell 3.84 to 299.96. The choice/ select spread widened and is at 34.05 and the load count was 78.
Friday’s estimated slaughter is 120,000, which is above last week’s 118,000 and below last year’s 122,000. Saturday slaughter is expected to be 26,000, which is above last week’s 16,000 and below last year’s 45,000. The estimated total for the week (so far) is 649,000, which is above last week’s 634,000 and below last year’s 665,000.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading has been inactive on light demand in all feeding regions. Not enough purchases for a market trend. In Kansas the last reported market was on Thursday with live purchases at 180.00. In the Western Cornbelt the last reported market was on Thursday with live and dressed purchases from 184.00-185.00 and at 290.00, respectively. In Nebraska the last reported dressed purchase market was on Thursday at 290.00 and the last reported live purchase market was on Wednesday from 182.00-185.00. The last reported market in the Texas Panhandle was on Tuesday with live purchases at 180.00.
The USDA is indicating cash trades for live cattle from 174.00 – 187.50 and from 280.00 – 293.00 on a dressed basis (so far).
United States Cattle on Feed Down 3 Percent
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.6 million head on June 1, 2023. The inventory was 3 percent below June 1, 2022.
Placements in feedlots during May totaled 1.96 million head, 5 percent above 2022. Net placements were 1.88 million head. During May, placements of cattle and calves weighing less than 600 pounds were 380,000 head, 600-699 pounds were 295,000 head, 700-799 pounds were 480,000 head, 800-899 pounds were 505,000 head, 900-999 pounds were 215,000 head, and 1,000 pounds and greater were 80,000 head.
Marketings of fed cattle during May totaled 1.95 million head, 2 percent above 2022.
Other disappearance totaled 74,000 head during May, 3 percent below 2022.
August Feeder Cattle surged as corn continued its fall from grace. The corn weakness put the spring back in Feeders, with excited bulls bidding up price right from the start of the day. It gapped open higher, making the low during the first 5-minutes of the session at 231.40 and not stopping until it made the high at 235.15 by mid-morning. It consolidated the rest of the session and settled at 233.95. The gap is from the low to the Thursday high at 230.925. The establishment of this gap closed the gap lower trade from the 6/20 low at 231.875 to the 6/21 high at 230.65. The price action created a potentially bullish pattern called an Island Reversal pattern. If there is follow-through to the upside, we could see a test of resistance at 235.95 and then the 21-DMA now at 236.85. There is resistance just above at 237.25. If settlement fails, we could test support at 233.10 and then the gap.
The Feeder Cattle Index declined and is at 221.00 as of 6/22/2023.
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, June 29, 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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