Walsh Trading Daily Insights
Commentary
March Feeder Cattle rallied to just past resistance at 184.375 to the session high at 184.75. It couldn’t sustain the rally and pulled back, settling at 183.925. The low came in at 183.15. The low was just above support at the rising 50-DMA now at 183.125. The cash index has risen but futures are rich to the index and I think it limited the upward movement of Feeders. Corn was stable, settling just above the previous settlement and it also could have limited Feeder Cattle as worries persist of a potential rally in corn. We’ll see…. If Feeders hold settlement, we could re-test resistance at 184.375. Resistance then comes in at 185.80. A pullback from settlement could see price revisit the 50-DMA and then support at 182.70. Support then comes in at the 100-DMA now at 181.075.
The Feeder Cattle Index increased and is at 179.88 as of 01/27/2023.
April Live Cattle surged to a new high for the up move, reaching 163.475 and settling nearby at 163.35. The low came in at the open at 160.95. The surge took price past resistance at 161.75 and 162.725 which puts resistance at 164.90 in traders’ crosshairs, in my opinion. Excitement in cattle came about as packers waited until Friday to buy their cattle and they had to pay up to do so. They paid 156.00 in the South, which is higher than the previous week and slaughtered more cattle. Weights are declining and to achieve production goals, packers will have to slaughter more cattle, in my opinion and with numbers on the decline they will have to pay up to get cattle bought… once again in my opinion. Could this be the start of packers losing control of the market…. Once again… We’ll see… The cattle inventory report comes out after the close and futures traders may have finally seen estimates that made them bullish (at least for the day). The report is expected to show cattle inventory declining, with most categories down from last year. If settlement holds, we could work our way to test resistance at 164.90. A failure from settlement could see price pullback to test support at 162.725. Support then comes in at 161.75.
Boxed beef cutouts were higher as choice cutouts increased 0.34 to 268.10 and select increased 0.98 to 251.52. The choice/ select spread narrowed and is at 16.58 and the load count was 71.
Monday’s estimated slaughter is 126,000, which is above last week’s 124,000 and last year’s 119,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trade has been at a standstill in all major feeding regions. Last week in the Southern Plains live purchases traded at 156.00. In Nebraska last week, live and dressed purchases traded from 153.00-156.00 and at 248.00, respectively. Last week in the Western Cornbelt live and dressed purchases traded from 152.00-157.00 and at 248.00, respectively.
The USDA is indicating no cash trades for live cattle 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, February 02, 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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