Walsh Trading Daily Insights
January Feeder Cattle broke out to a new high for the recent up move. It broke out above resistance at 180.80 and made the session high at 182.375. The high was just shy of resistance at 172.70. Settlement was at 181.95, with the low coming in at 180.925. Weaker corn and a strong Live Cattle futures market contributed to the gain in my opinion. A failure from settlement could see price test support at 180.80. Support then comes in at 178.95. If resistance at 182.70 is taken out we could see price move towards resistance at 184.375.
The Feeder Cattle Index increased and is at 173.62 as of 10/21/2022.
December Live Cattle rallied past resistance at 153.025 to a new high for the up move at 154.20. It settled near the high at 154.125. The low was at 152.275. Stronger than expected slaughter last week, stronger cutout prices a Cattle on Feed report showing lower supplies now and upcoming excited traders to anticipate higher cash prices this week in my opinion. Cash prices have been rising and the 5-area average jumped over $3 above the prior week. Packer slaughter has not come down as demand for beef has not fallen off as many expected. Retailers have been aggressive in acquiring beef as they are aware of the declining numbers and want to ensure a steady supply to meet demand. Feedlot operators are current with their marketings and consumers have demand choice beef over the cheaper select and even though weights are high the grading is not up to par as producers have gone to cheaper feed options as corn prices remain high, in my opinion. So, packers have to be aggressive and go after cattle to fulfill orders. The rally has made 6 sessions in a row of higher highs and has brought price to levels not seen since June 2015. Cash must confirm this rally or we could see a pullback in futures, in my opinion. A break down below settlement could see support tested at 153.025. Support then comes in at 151.75. Continued euphoria could lead to a test of resistance at 156.30. Resistance then comes in at 157.25.
Boxed beef cutouts were higher as choice cutouts surged 4.21 to 257.92 and select increased 1.25 to 225.61. The choice/ select spread widened and is at 32.31 and the load count was 86.
Monday’s estimated slaughter is 126,000, which is even with last week and above last year’s 120,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading in the Southern Plains and Nebraska has been at a standstill. In the Western Cornbelt negotiated cash trading has been mostly inactive on very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live purchases traded at 148.00. For the prior week in Nebraska live and dressed purchases traded from 150.00- 152.00 and at 236.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded at 150.00 and from 232.00-236.00, respectively.
The USDA is indicating cash trades for live cattle 151.00 and nothing on a dressed basis (so far).
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, October 27, 2022 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.
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