March Feeder Cattle opened higher and then broke down to the low of the day at 231.975. It drifted, trading withing the 1st half hours range till late morning when the fats took off, taking Feeders with it. Price surged, trading up to the high of the day at 238.925 and then dipping to settle at 238.175. This is another new high for the recent up move, pushing past the 50% retracement (236.90) of the all-time high at 264.675 to the 209.15 low from December 4th on the continuous chart. The rally also took price past long-term moving average resistance at the 100-DMA, now at 236.65 and the 200-DMA now at 237.65. I have resistance at 238.35 that the price action shot past but pulled back to settle below it. The 100-DMA is declining. The 200-DMA is rising. The 100-DMA crossed below the 200-DMA. This area should be strong resistance. The settlement above this is a positive for the market, but the downward cross could pull price back in line. In my opinion, Feeders need to start Friday strong or we could see a pullback to the retracement and the long-term moving averages. A failure from here could see support tested at 235.95. A strong open could propel price higher, leading to a test of resistance at 240.875. Resistance then comes in at the 61.8% retracement level at 243.475. January expired on Thursday with settlement at 232.025. This implies expectations of cash moving higher in the short run towards the settlement price.
The Feeder Cattle Index increased and is at 230.68 as of 01/24/2024.
April Live Cattle opened lower and broke down to the low of the day at 177.425. It drifted as traders waited for cash news as trading in the cash market was light with the USDA showing a 174.00 trade on Wednesday. And then some trades at 173.00 Wednesday into Thursday morning. Cash started to heat up late morning with packers suddenly getting aggressive and raising their bids after not acquiring enough cattle at the low prices. With talk circulating packers were bidding higher, futures took off and surged to the high at 181.10. The cash excitement took price past resistance at the 100-DMA (178.25), the 179.40 resistance level and then the 61.8% retracement level at 180.725. It stalled just below resistance at 181.175 and settled below the 61.8% retracement level at 180.70. The retracement is from the all-time high at 192.05 to the 162.40 low on December 7th. Packers took price up to 177.50 on a live basis and bought cattle from 275.00 to 277.50 on a dressed basis, taking out last week’s 277.00 dressed high in the process. Cutouts have weakened after its weather-related surge and are entering a seasonally weak period, putting packers in a tough situation. If futures can overcome resistance at 181.175, it could test resistance at 182.575. If futures pullback from settlement, it could test support at 179.40. Support then comes in at the 100-DMA and the nearby 178.10 support level.
Boxed beef cutouts were mixed as choice cutouts decreased 0.82 to 298.68 and select increased 0.61 to 287.85. The choice/ select spread narrowed and is at 10.83 and the load count was 146.
Thursday’s estimated slaughter is 126,000, which is above last week’s 121,000 and last year’s 124,398. The estimated total for the week (so far) is 492,000, which is above last week’s 462,000 and below last year’s 499,571.
The USDA report LM_Ct131 states: Thus far for Thursday in the Texas Panhandle negotiated cash has been moderate on trade and demand. Compared to last week live FOB purchases traded 1.50 higher at 175.00. In Kansas negotiated cash has been slow on light to moderate demand. Compared to Wednesday live FOB purchases traded 1.00 higher at 175.00. In Nebraska negotiated cash has been moderate on trade and demand. Compared to last week live FOB purchases traded 2.00-4.00 higher from 175.00-177.00. Compared to last week dressed delivered purchases traded 3.00-4.00 higher at 277.00. in the Western Cornbelt negotiated cash has been moderate on trade and demand. Compared to last week live FOB purchases traded unevenly steady from 174.00-176.00. Last week dressed delivered purchases traded from 273.00-274.00.
The USDA is indicating cash trades for live cattle from 173.00.00 – 177.50 and from 275.00 – 277.50 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 30, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
tested support at the
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.