Walsh Trading Daily Insights
Commentary
March Feeder Cattle took one to the chin on Tuesday as Fat cattle broke down and corn reversed overnight declines to rally during the US Day session. The break down in Feeders took price to a new low for the current down move at 181.15, which is just below support at the 100-DMA now at 181.225. It settled near the low but above the 100-DMA at 181.30. The high came in at 183.225. If Feeders push through the 100-DMA we could test support at 180.80, and then move towards support at 178.95. If settlement holds, we could test resistance at 182.70. Resistance then comes in at 184.375.
The Feeder Cattle Index decreased and is at 181.05 as of 01/16/2022.
April Live Cattle is now the lead contract as its volume has exceeded the volume of the February contract. April opened at the high of the day at 160.90 and broke down to the session low at 159.45. It bounced and settled at 160.10. The high was just above resistance at 160.75 and the low just above support at 159.075. Weakness quickly set into cattle as packers were able to get producers to take lower money last week as the 5-area weighted average price was about a buck under the prior week’s average. Traders have been expecting a steady grind higher and this drop put traders in a selling mode. There is bad weather coming to the Northern markets so it will be interesting to see if producers are able to hold out for higher money or will just look to get rid of cattle as the weather worsens. Now that April is the lead contract instead of a back month, traders will look more closely to its relationship to where cash is trading, just like in prior lead contract switches. If cash doesn’t rally April could be put in a bind. If settlement holds, we could re-test resistance at 160.90. Resistance then comes in at 161.75. A failure from settlement could see price test support at 159. 075. Support then comes in at 157.25.
Boxed beef cutouts were lower as choice cutouts dipped 0.77 to 276.66 and select decreased 2.02 to 254.53. The choice/ select spread widened and is at 22.13 and the load count was 133.
Tuesday’s estimated slaughter is 128,000, which is above last week’s 127,000 and last year’s 111,000. The estimated total for the week (so far) is 253,000, which is below last week’s 256,000 and above last year’s 228,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trade has been mostly inactive with very light demand. Not enough purchases for a market trend. The latest established market was last week in these regions. In the Southern Plains live purchases traded at 156.00. In Nebraska live and dressed purchases traded from 156.00-157.00 and from 250.00-252.00, respectively. In the Western Cornbelt live and dressed purchases traded at 158.00 and from 250.00-252.00, respectively.
The USDA is indicating cash trades for live cattle at 157.00 and nothing 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 19, 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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