October Live Cattle is now the lead contract as its volume has overtaken the volume of the August contract. The switch to the October contract has put a new contract high in place as the October contract is trading at a premium over the August contract. The new high is at 183.35 and the new settlement high is at 182.25. Monday’s low came in at 182.25. Cash is at a standstill on Monday as packers and producers get their ducks in a row. The price action ended with Spinning Top Candlestick formation. This indicates indecision as the move to the October contract has put price into the upper end of the cash trade and the South still lags in a big way. We could see some pressure in the October contract as traders’ debate where the low end of the trade will be by October. If settlement hold, we could re-test the all-time high. Resistance then comes in at the daily R2 at 184.175 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 increased 0.84 to 306.78 and select decreased 0.87 to 275.74. The choice/ select spread widened and is at 31.04 and the load count was 105.
Monday’s estimated slaughter is 126,000, which is above last week’s 122,000 and last year’s 124,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been inactive on very light demand in all major feeding regions. Last week in Kansas live purchases, with 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 from two weeks ago live purchases traded at 178.00.
The USDA is showing no cash trades for live cattle and on a dressed basis (so far).
August Feeder Cattle continued higher as weakness in corn spurred bulls to take price up to resistance at 248.85. The low come in early at 245.30, which is just under support at 245.75 to the high at the end of the day at 249.95. It settled at 249.25. Settlement was above resistance and puts the all-time high just recently established at 251.30 back in traders’ crosshairs. If corn continues to weaken it could add fuel to the Feeder Cattle’s fire. Resistance then comes in at the daily R2 at 252.73 and then the weekly R2 at 254.88. 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.
The Feeder Cattle Index fell and is at 237.73 as of 7/14/2023.
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
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Walsh Trading, Inc.
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