Walsh Trading Daily Insights
Commentary
January Feeder Cattle gap opened higher, making the low at the open (181.50) and then streaking to the session high at 183.075 all in the opening 10 minutes of trade. It spent the rest of the session consolidating in the upper end of the trading range. It settled at 182.625. The gap is from the Friday high at 181.20 to the Monday low at 181.50. The excitement in Feeders was the result of a perceived bullish Cattle on Feed report showing fewer placements than expected, lower on feed numbers and a slightly better marketing number. The excitement couldn’t keep price above the 182.70 resistance level and the settlement below was disappointing from a bullish perspective. This is with corn continuing to display weakness. The Feeder Cattle Index has been in a steady grind lower and this could have been the limiting factor for bullish sentiment. A failure from settlement could see price test support gap, with 180.625 support next. Support then comes in at the rising 100-DMA now at 18.225. If resistance at 182.70 is taken out, a test of resistance at 184.375 is likely. Resistance then comes in at 185.80.
The Feeder Cattle Index decreased and is at 174.64 as of 11/18/2022.
February Live Cattle also gap opened higher on the Cattle on Feed news. The report came out Friday afternoon after the close showing on feed numbers at 11,706,000 head down 2% from last year. Placements came in lower than expected at 2,108,000 head, down 6.1%. Trade was expecting down 3.6%. Marketings were at 1,802,000 head, up .6% from last year. The placements number was a record low for October and with September also down, puts packers in a bind down the road in my opinion. Marketings should also decline and if corn prices make their way lower, we could see feeders putting more pounds on cattle as packers may demand heavier cattle as they would need to keep production up. Price rallied after making the low at 156.26 to the high at 156.875. It consolidated and settled near the high at 156.725. The gap is from the Monday low to the Friday high at 156.125. As you can see, the rally off the gap open didn’t take futures far, as trade in the cash market has yet to develop and we are in a holiday market with Thanksgiving on Thursday, limiting the enthusiasm in my opinion. If price can hold settlement, we could test resistance at 157.25. Resistance then comes in at 159.075. A breakdown below the gap could see support tested at 155.10. Support then comes in at the rising 8-DMA now at 154.225.
Boxed beef cutouts inched higher as choice cutouts increased 0.70 to 255.70 and select increased 0.40 to 233.23. The choice/ select spread widened and is at 22.34 and the load count was 112.
Monday’s estimated slaughter is 128,000, which is even with last week and above last year’s 122,000.
The USDA report LM_Ct131 states: Thus far Monday negotiated cash trade was mostly inactive on light demand in all feeding regions. Not enough purchase in any feeding region for an adequate market test. The latest established market in any feeding region was last week with live purchases in the Texas Panhandle at 150.00 with a few up to 152.00. In Kansas last week live purchases traded from 150.00-152.00. In Nebraska last week, live purchases traded from 153.00-155.00 with dressed purchases at 242.00, with a few up to 242.50. Last week in the Western Cornbelt, live purchases traded from 152.00-155.00 with dressed purchases at 242.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, December 01, 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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