Walsh Trading Daily Insights
Commentary
March Feeder Cattle continued to press lower on Thursday, trading to another new low at 179.175 for the current down move. Price continues to get pressured even with corn continuing its retracement of its recent rally as weakness in the Feeder cash market is pressuring futures. The was at 181.375 and occurred in the first 5 minutes of the day. It settled at 180.10. The breakdown took price below the 100-DMA now at 181.15 and the low was just above support at 178.95. The close below the 100-DMA could put more pressure on Feeders as the rising 200-DMA now at 177.45 is the next target for bears to go for. Support then comes in at 175.70. If Feeders hold settlement, we could test resistance at 180.80 and then the 100-DMA. Resistance then comes in at 182.70.
The Feeder Cattle Index decreased and is at 177.87 as of 01/18/2023.
April Live Cattle broke down hard on Wednesday as cash market prices dropped, trading as low as 153.00 this week. The breakdown took price down to 158.55 and the high occurred on the opening five minutes at 160.075. Settlement was at 159.125. Packers continue to squeeze producers as they try to maintain their profit margins as cutouts work lower. The power they seem to exert over both sides of the market is extraordinary in my opinion. They have all the information and they know how to use it to their advantage. Cutting back on slaughter when necessary, using the bad weather which usually works in producers favor, but with feed costs high it obviously is working to their detriment instead (in my opinion). The cattle on feed report comes out after the close and it is expected to be bullish, but knowing this hasn’t helped producers get the prices they are seeking, once again in my opinion. The low was right on top of support at the 8-DMA now at 158.525 and settlement was just above the key level at 159.075. If settlement holds, we could work or way to the Thursday high and maybe re-test resistance at 160.75 if shorts want to get cleaned up before the report. Resistance then comes in at 161.75. A failure from settlement could see price re-test support at the 8-DMA and then the rising 21-DMA now at 157.75. Support then comes in at 157.25.
Livestock Slaughter Report Highlights
Commercial red meat production for the United States totaled 4.47 billion pounds in December, down 7 percent from the 4.78 billion pounds produced in December 2021.
Beef production, at 2.22 billion pounds, was 6 percent below the previous year. Cattle slaughter totaled 2.68 million head, down 5 percent from December 2021. The average live weight was down 7 pounds from the previous year, at 1,385 pounds.
Pork production totaled 2.23 billion pounds, down 7 percent from the previous year. Hog slaughter totaled 10.3 million head, down 7 percent from December 2021. The average live weight was unchanged from the previous year, at 292 pounds.
January to December 2022 commercial red meat production was 55.5 billion pounds, down 1 percent from 2021. Accumulated beef production was up 1 percent from last year, veal was up 1 percent, pork was down 2 percent from last year, and lamb and mutton production was down 5 percent.
Boxed beef cutouts were mixed as choice cutouts fell 2.57 to 271.51 and select increased 1.83 to 255.69. The choice/ select spread narrowed and is at 15.82 and the load count was 130.
Thursday’s estimated slaughter is 120,000, which is below last week’s 122,000 and above last year’s 117,000. The estimated total for the week (so far) is 493,000, which is below last week’s 505,000 and above last year’s 461,000.
The USDA report LM_Ct131 states: So far for Thursday negotiated cash trading has been limited on light demand in the Southern Plains, Nebraska and Western Cornbelt. A few live purchases traded at 155.00 in Kansas. In Nebraska a few dressed purchases traded from 248.00-249.00. In the Western Cornbelt a few dressed purchases traded at 248.00. However, not enough purchases for a full market trend in any regions. 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 from 153.00 – 157.00 and from 245.00 – 249.00 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 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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