April Feeder Cattle is now the lead contract as its volume has surpassed the March contract volume. It opened lower, broke down to the low of the day at 256.65 and then surged to the high of the day at 260.80. This is a new high for the up move and it pulled back from the high and settled in the upper middle of the range at 258.90. The rally stalled just below resistance at 261.05 and the pullback into the close saw it settle above support at 257.925. Initial negativity off of the Cattle on Feed report led to the weaker open. Continued strength in the cash market led to the rally but the strong futures premium to the index pressured price later. There is continued hope that feeders will continue to gain in price into April but the April contract may be too far in front of the index. If futures can hold settlement, it could re-test resistance at 261.05. Resistance then comes in at 262.075. A failure below settlement could see support re-tested at 257.925 and then the February 23 low at 255.775.
The Feeder Cattle Index increased and is at 246.64 as of 02/23/2024.
April Live Cattle also opened lower and traded down to the low at 186.05. It rallied to the high at 188.80 and then dipped lower to settle at 188.10. This is encouraging in my opinion for producers as the bearish (against expectations) Cattle on Feed report didn’t pressure price for too far and too long. The numbers may have been bearish with a lesser decline in placements but, it still showed a decline of 7.4%. The cash market however, was strong on Friday and made a new high after the report came out. I think this neutralized any negative feelings over the placements and set higher expectations for cash for this week. This… despite the continued slowdown in slaughter by the packers. Cash traded from 180.00 to 185.00 on a live basis for the week and from 283.00 to 294.00 on a dressed basis. Choice cuts broke 300.00on a low load count and could start to go higher from here. Packers will continue in my opinion to slow the slaughter and this week’s number is expected to be around 590,000. They want to get cattle fat and boost production while leaving more in the yards. With corn cheap, this may not scare producers and knowing the packers’ tactics and if cutouts move higher, may still see cash prices go higher. We’ll see…. If futures can hold settlement, it could re-test the February 22 high at 189.20. Resistance then comes in at 190.075. If futures fall below support at 187.725, it could pullback and test support at the rising 8-DMA now at 186.85.
Boxed beef cutouts were higher as choice cutouts increased 1.18 to 301.79 and select increased 1.68 to 287.99. The choice/ select spread narrowed and is at 13.80 and the load count was 82.
Monday’s estimated slaughter is 122,000, which is above last week’s 104,000 and below last year’s 123,836.
The USDA report LM_Ct131 states: Thus far for Monday in all trading regions negotiated cash has been at standstill. Last week in the Texas Panhandle live FOB purchases traded at 183.00. Last week in Kansas live FOB purchases traded from 182.00-183.00. Last week in Nebraska live FOB purchases traded at 183.00 with dressed delivered purchases traded at 292.00. Last week in the Western Cornbelt live FOB purchases traded from 182.00-184.00 with dressed delivered purchases traded from 290.00-292.00.
The USDA is indicating no cash trades for live cattle and 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 27, 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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