Walsh Trading Daily Insights
Commentary
January Feeder Cattle eked out a small gain as it consolidated withing Friday’s trading range forming an inside candlestick. The Monday low was at 178.825, which is just below support at 178.95 and the high just above resistance at the 13-DMA (180.05) at 180.175. Settlement was just below the 13-DMA at 179.925. Price has traded in a narrow range for the past 4 sessions as traders wait for some direction from corn. Corn has been in consolidation mode also and it has worked its way into the lower end of its range. The WASDE report comes out on Wednesday and could give corn some direction. This could influence a move in feeder Cattle. A failure from support could see price test support at the October 31 low at 177.70. Support then comes in at 175.70. If the Monday high is taken out, a test of resistance at 180.80 is likely. A break out above here could see price move towards resistance at 182.70.
The Feeder Cattle Index down ticked and is at 176.91 as of 11/04/2022.
December Live Cattle opened the week on a lower note, down-ticked to the session low at 151.35 and then kicked open the gate and rallied the rest of the session to the high at 153.25. It settled near the high at 153.5. The low tested support at 151.75 and the high and settlement was above resistance at 153.025. Domestic demand has been strong and it looks like retailers expect this holiday season to be strong and have been making sure they have product to meet this expected demand. Cash is expected to trade higher this week and packers seemed to expect this as they cut back on slaughter on Monday, trying to paint a picture in my opinion. Weights are higher as good weather has enhanced feedlot performance; furthering packers attempts to mute cash price increases. If they can cut back on slaughter, they can keep control of both the beef and cash markets. Higher cutout prices while keeping cash prices at bay. We’ll see if this slaughter cut back is just a one-day event or a start to a trend. If price can hold settlement, we could move towards resistance at 156.30. Resistance then comes in at 157.25. A break down below 153.025 could see support tested at the flattening 8-DMA now at 152.375. Support then comes in at 151.75.
Boxed beef cutouts were higher as choice cutouts increased 0.80 to 264.55 and select surged 4.02 to 235.92. The choice/ select spread narrowed and is at 28.63 and the load count was 97.
Monday’s estimated slaughter is 123,000, which is below last week’s 128,000 and above last year’s 120,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. 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 Texas Panhandle live purchases traded from 149.00-150.00. For the prior week in Kansas live purchases traded at 150.00. For the previous week in Nebraska live and dressed purchases traded at 153.00 and 242.00, respectively. Last week in the Western Cornbelt live and dressed purchases traded at 153.00 and from 240.00-242.00, respectively.
The USDA is indicating no cash trades for live cattle and 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, November 10, 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
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