Walsh Trading Daily Insights
Commentary
January Feeder Cattle opened lower and traded just past resistance at 184.375 to the high at 184.45. Resistance once again held, and the market broke down and traded to the session low at 181.60. It hung around the low the rest of the session and settled at 182.10. The fall from grace took price below support at 182.70 and the 21-DMA at 181.725. Settlement was above the 21-DMA so that is a positive for the market but, the breakdown took price below the ledge that formed over the past 6 sessions. If settlement fails, we could test support at the 100-DMA at 181.025 and at the nearby key level at 180.80. If settlement holds, we could re-test resistance at 184.375. Resistance then comes in at 185.80.
The Feeder Cattle Index decreased and is at 178.74 as of 12/16/2022.
February Live Cattle gap opened higher and then closed the gap, drifting higher the rest of the session and settling near the high in a quiet tight market. The high was at 156.225, the low at 155.725 and settlement at 156.05. Packers slowed down slaughter last week, totaling only 625,000 for the week. Bad weather and packer desire to control retailers and producers saw slaughter total only 100,000 for Monday. Slow down the slaughter and try to get producer prices down and cutout prices higher, in my opinion. Last week they were not able to knock down the producer price as it came in mostly steady with the week before, cutouts however, did move higher. So, look for slaughter numbers to continue to decline especially with the next couple of weeks short weeks and thereafter lower numbers available for slaughter. On Friday, we get the Cattle on Feed Report and expectations are for continued declines in placements, keeping bullish producer hopes alive. If settlement holds, we could test resistance at 156.30. Resistance then comes in at 157.25. A failure from settlement could see price test support at 155.10.
Boxed beef cutouts were higher as choice cutouts increased 1.00 to 263.83 and select jumped 3.12 to 238.57. The choice/ select spread narrowed and is at 25.26 and the load count was 74.
Monday’s estimated slaughter is 100,000, which is below last week’s 125,000 and last year’s 121,000. Saturday slaughter was revised lower to 20,000, which brings last week’s estimated total down to 625,000.
The USDA report LM_Ct131 states: Thus far for Monday in the Southern and Northern Plains negotiated cash trading 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 155.00. For the prior week in Nebraska and Western Cornbelt live and dressed purchases traded from 155.00-157.00 and at 248.00, respectively. In Colorado, two weeks ago, live purchases traded at 157.00.
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 22, 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.
tested support at the
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.