Commentary: April Live Cattle tried to hold Tuesday’s gains early in the trading session but the constant pressure in the outside markets and the constant negative commentary about the coronavirus and the resultant concerns about large gatherings were too much for cattle to handle. The quarantining of ships, certain towns and cancellations of large events continues to cause demand concerns for beef. With businesses cancelling trips, worries about free spending business people not going to restaurants puts a large shadow over the beef industry, more so than the less expensive pork which has seen (so far) excellent exports. With the beef industry export business not as robust as the pork industry, domestic demand must remain strong. If people aren’t gathering, entertaining and celebrating, will demand for expensive steaks diminish? I think that is the thinking of traders as they watch the equity markets fail. When you look at the cutouts, you still see interest and purchases being made although at lower prices than last year at this time. The select has seen a breakdown again below $200.00, which is causing the choice/ select spread to jump again. I think that is positive as people are expressing a desire for better cuts of beef, in my opinion. Beef is starting to get features in grocery stores at lower sale prices (at least in my area) which could keep people shopping for beef. The weather has been reasonable which if it continues could see people grilling (at least in the Chicago area) at home. So maybe that could mitigate the expected restaurant declines. Will congress and the President be able to band together provide a united front to the American people? A unified government will calm the people. Constant infighting will cause confusion and create more angst exacerbating the situation. Stay tuned! Resistance is at 104.85 – 104.20, 106.025 and then 107.30. Support is at 103.00 and then 101.65 and then 100.275. Cash trade took place today from 108.00 to 110.00 on a live basis and from 174.00 to 176.00 on a dressed basis. Boxed Beef cutouts were mixed on light to moderate demand and moderate offerings. Choice cutouts increased 0.08 to 207.17 and select was down 2.22 to 196.49. The choice/ select spread widened to 10.68 and the load count was 154. Slaughter was estimated to be 123,000.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays and our next webinar will be on Thursday, March 12th 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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