October Live Cattle rallied to a new all-time high as traders are hoping packers will be paying up in the cash market this week. Bullishness is running high with traders as they think packers need to purchase cattle to meet their order flow. The new high is at 183.75 and the new settlement high is at 183.55. Tuesday’s low came in at 182.05. If settlement holds, we could test resistance at the daily R1 at 184.25 and then the Weekly R2 at 184.875. A failure to hold settlement could see a setback to support at 181.175. Support then comes in at 179.40.
Boxed beef cutouts were mixed as choice cutouts decreased 2.10 to 304.68 and select increased 0.87 to 276.61. The choice/ select spread narrowed and is at 28.07 and the load count was 123.
Tuesday’s estimated slaughter is 127,000, which is below last week’s 128,000 and above last year’s 123,000. Monday’s slaughter was revised lower to 120,000. The estimated slaughter for the week is 247,000, which is below last week’s 250,0000 and even with last year.
The USDA report LM_Ct131 states: So far for Tuesday in the Southern Plains negotiated cash trading has been at a standstill. In Nebraska and Western Cornbelt negotiated cash trading has been inactive on very light demand. Not enough purchases in any region for a market trend. Last week in Kansas live purchases, on a light test, traded from 175.00-184.00. In Nebraska for the previous week live and dressed purchases traded at 186.00 and from 290.00-292.00, respectively. In the Western Cornbelt for the prior week live and dressed purchases traded from 184.00-185.00 and from 290.00-295.00, respectively. In the Texas Panhandle two weeks ago, with live purchases at 178.00.
The USDA is showing cash trades for live cattle from 183.00 -185.00 and from 290.00 – 295.00 on a dressed basis (so far).
August Feeder Cattle fell back at the end of the session a a strong corn market finally outweighed a rising cattle market. Feeders spent the day riding the seesaw, rising with the cattle strength and falling back as corn continued making new highs. This went on all day with the low made early and the high made mid-morning. The low was 247.60, the high at 249.625. It settled at 248.00. The price action formed an inside candlestick with the price action revolving around the key level at 248.85. Settlement was below the key level so if corn continues higher, traders could feel its pressure. The markets have been volatile and could continue in that fashion going forward. A breakdown below the low could see price test support at the rising 8-DMA now at 246.75, the 13-DMA now at 246.05 and then support at 245.75. We need to use pivot levels to the upside as we are in new territory for this market. A failure from settlement could put price back to support at 245.75. A rally past 248.85 could see the Monday high tested at 249.95 and then move towards the all-time high at 251.30.
The Feeder Cattle Index increased and is at 238.45 as of 7/17/2023.
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 20, 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.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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