Walsh Trading Daily Insights
Commentary
January Feeder Cattle reversed the positive price action from Monday, opening lower and breaking down to support at the 100-DMA (180.70), making the low just below it at 180.30. It was able to bounce off the low and it settled at 181.80. The high was at 183.15. Monday’s pullback off the high, along with worries the fat cash market will weaken led traders to liquidate positions and take a breath after 5 up days to a new high in Feeders. The bounce off the low is good news for bulls as the 100-DMA proved to be strong support. If settlement holds, we could test resistance at 182.70 and then move towards the Monday high at 184.20. If settlement fails, we could re-test the 100-DMA. Support then comes in at the 21-DMA now at 180.000 and 178.95.
The Feeder Cattle Index increased and is at 178.53as of 12/05/2022.
February Live Cattle gap opened lower, closed the gap, making the high at 155.50 and then it fell apart, breaking down the rest of the session to the low at 153.50. It settled near the low at 153.625. Monday’s collapse in the cutouts put fear in traders’ minds of weakening demand for beef and with equity markets falling, the pump was primed for downside action, in my opinion. Cash has been quiet, but should pick up on Wednesday as that has been the norm recently. Packers are losing profitability, supplies of cattle are believed to be in decline so they will do whatever it takes to maintain their status. Slaughter levels are expected to be cut as Saturdays will likely be cut out of the equation as packers move to keep feeders feeding to higher weights, in my opinion. Follow-through to the downside could see price test support at 153.075 and then the rising 50-DMA now at 151.85. If the low holds, we could test resistance at the 21-DMA at 154.45 and then 155.10.
Boxed beef cutouts were lower as choice cutouts dipped 0.66 to 242.65 and select declined 1.97 to 219.14. The choice/ select spread widened and is at 23.51 and the load count was 147.
Tuesday’s estimated slaughter is 128,000, which is even with last week and above last year’s 124,000. The estimated total for the week (so far) is 255,000, which is below last week’s 256,000 and above last year’s 245,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been mostly inactive on very light demand in Nebraska, and at a standstill in all other major feeding regions. Not enough purchases in any region for a market trend. Last week in the Southern Plains live purchases traded at 155.00. In Nebraska for the prior week live and dressed purchases traded at 157.00 and from 248.00-249.00, respectively. In the Western Cornbelt for the previous week live and dressed purchases traded from 157.00-158.00 and at 249.00, respectively. In Colorado live purchases traded at 157.00.
The USDA is indicating cash trades for live cattle from 155.00 – 156.00 and at 247.00 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 08, 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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