Walsh Trading Daily Insights
Commentary
March Feeder Cattle reversed Tuesday’s sad start to the year, surging to a new high for the up move at 188.75 in the process. The low was made during the opening 5 minutes of trade at 184.875 and the surge was over by 10AM (CST). It consolidated near the high and settled at 188.225. Corn collapsed further in its destructive start to the year and this time cattle bulls took notice. The rally stalled just under resistance at 188.95 but is at the highest level for the lead contact since August when the October contact became the lead and reached 190.20 before collapsing. If settlement fails, we could test support at 187.20 and then the rising 8-DMA now at 186.325. If Feeders can hold settlement, we could test resistance at 188.95 and then the August high. Resistance then comes in at 190.60.
The Feeder Cattle Index decreased and is at 180.73 as of 01/03/2023.
February Live Cattle tried to regain its footing after Tuesday’s break down but, was only able to consolidate within Tuesday’s range. A strong start to the session took price to the session high at 157.85, making the low within the first 5 minutes of the session and looking like it wanted to recoup Tuesday’s losses. It wasn’t meant to be however as the rally was over by 9:15 AM (CST) and a pullback took place to the 157.25 key level and it meandered around it the rest of the day, settling just above it at 157.275. We are left with an inside candlestick and a market unsure of itself, unlike what happened in the Feeder Cattle. Hopefully, a strong start to the cash market today will jumpstart futures on Thursday. Cash trades took place and ranged from 158.00 – 159.50 on a live basis. I think that provides some hope if you are looking for higher prices going forward as many were expecting packers to be able to peal off price this week because of the larger number of negotiated purchases than expected last week and a greater number on this week’s show list than last week. If settlement holds, we could test resistance at the flattening 8-DMA now at 157.675. A rally past the Wednesday high could see price move towards resistance at 159.075. A failure from settlement could see price test support at 156.30. Support then comes in at 155.10.
Boxed beef cutouts were mixed as choice cutouts were dumped 4.05 to 282.89 and select increased 1.77 to 256.40. The choice/ select spread narrowed and is at 26.49 and the load count was 138.
Wednesday’s estimated slaughter is 125,000, which is below last week’s 128,000 and above last year’s 114,000. The estimated total for the week (so far) is 258,000, which is below last week’s 262,000 and last year’s 337,000.
The USDA report LM_Ct131 states: Thus far Wednesday negotiated trade was light on light to moderate demand in the Western Cornbelt. Trade was mostly inactive on light demand in all other feeding regions. Not enough purchases for an adequate market trend in any feeding region. The latest established market in the Southern Plains was last week with live purchases at 157.00. For the prior week in Nebraska live and dressed purchases traded at 158.00 and 252.00, respectively. For the previous week in the Western Cornbelt live and dressed purchases traded from 157.00-160.00 and from 250.00-252.00, respectively.
The USDA is indicating cash trades for live cattle from 158.00 – 159.50 and from 248.00 – 252.00 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, January 05, 2023 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
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