March Feeder Cattle opened higher, traded down to the low at 244.00 and the reversed course and traded up to the high at 246.125. The rally couldn’t be sustained and price once again tested the low. It held and price recovered to settle at 244.80. The rally took price to a new high for the up move, testing resistance at 245.75, but the pull back below resistance and lower settlement created a Doji candlestick indicating indecision at these levels. The cash index is rising, supporting the futures rally and futures are trading at a premium to the index. While this in my opinion is bullish for futures, if it follows the run up in similar fashion to all-time highs (as at that time futures kept on running away from the index), it remains that futures are rich to the index and we could see a snap-back towards the index. If futures can reclaim resistance at 245.75, it could test the Friday high. A surge past the high could set price on a path towards resistance at 248.85. A failure from settlement could see support tested at the 61.8% retracement (243.475) of the all-time high at 264.675 to the 209.15 low. Support then comes in at 242.475.
The Feeder Cattle Index increased and is at 239.17 as of 02/01/2024.
April Live Cattle opened unchanged and traded to the session low at 182.85. Price quickly recovered and rallied to the session high at 184.30. It pulled back and settled at 183.75. The rally tested resistance at 184.35 which held with the pull-back and settlement underneath it. It also closed the gap from 183.275 to 183.525 on the continuous chart. Settlement was above the gap. The rally also established a new high for the up move, a bullish positive for the price action. Packers paid up again for cattle as prices reached 179.00 on a live basis and 288.00 on a dressed basis. This cash firmness is igniting futures which in turn emboldens producers to hold out for higher prices. Packers for now have lost control of the price action. With cutouts unable to trade higher they will try to regain their control but with slaughter up this week, they may be forced to bid up for cattle. Performance is lagging in many areas and producers need to be compensated. A tough spot for packers in my opinion. If futures can get above resistance, it could test resistance at 185.75. Resistance then comes in at 187.225. If futures pullback from settlement, it could test support at 182.575. Support then comes in at 181.175.
Boxed beef cutouts were mixed as choice cutouts decreased 1.86 to 293.08 and select increased 0.22 to 283.47. The choice/ select spread narrowed and is at 9.61 and the load count was 147.
Friday’s estimated slaughter is 124,000, which is above last week’s 121,000 and last year’s 121,131. Saturday slaughter is expected to be 8,000, which is above last week’s 5,000 and below last year’s 19,880. The estimated total for the week (so far) is 637,000, which is above last year’s 618,000 and below last year’s 637,079.
The USDA report LM_Ct131 states: Thus far for Friday in the Texas Panhandle negotiated cash trade was at a standstill. The most recent market was Thursday with live FOB purchases at 178.00. In Kansas negotiated cash trade was mostly inactive on light demand. The most recent market was Thursday with live FOB purchases from 178.00-179.00. In Nebraska negotiated cash trade was slow on light demand. The most recent market was Thursday with live FOB purchases traded from 176.00-177.00, with dressed delivered purchases at 280.00. In the Western Cornbelt negotiated cash trade has been slow on light demand. The most recent market was Thursday with live FOB purchases from 177.00-179.00, with dressed delivered purchases at 280.00.
The USDA is indicating cash trades for live cattle from 173.00 – 179.00 and from 275.00 – 288.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, February 06, 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
Fax: 312.256.0109
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