Walsh Trading Daily Insights
Commentary
March Feeder Cattle opened strong with futures opening above resistance at 184.375 and then testing this key level right away, making the low at the key level. Feeders rallied the rest of the session, making the high at 186.40 and settling nearby at 186.15. This is above the 185.80 resistance level which puts resistance at 187.10 in traders crosshairs, in my opinion. I think Feeders played catch up to the fats as yesterday’s rally lagged the fats. Corn rallied early in the session, before giving way to slightly lower corn by the end of the day also helping Feeder Cattle. The Feeder Index continues to creep higher as feedlots have been aggressive in paying higher prices for feeders in light sales as the snowstorm in Nebraska (over the weekend) limited numbers. If Feeders hold settlement, we could test resistance at 187.20. Resistance then comes in at 188.95. A pullback from settlement could see price test support at 184.375. Support then comes in at the declining 21-DMA now at 184.10.
The Feeder Cattle Index increased and is at 180.42 as of 01/30/2023.
April Live Cattle made another new high for the up move, reaching 163.575 and then sagged, consolidating above the key level at 162.725 in front of the Cattle Inventory Report released after the close. (See below). settling nearby at 163.35. The low came in at the open at 160.95. The surge took price past resistance at 161.75 The low came in at 162.825 and settlement was at 163.025. Cash has yet to trade as packers are praying for a pullback and producers are hoping for more expansion in futures. The cattle inventory numbers are in line with estimates, but it confirms the bullish scenario for the cash market in my opinion. Will the in line numbers see speculators take some profits or does it excite bulls to see lower numbers on paper. We’ll see … If settlement holds, we could work our way to test resistance at 164.90. A failure from settlement could see price pullback below support at 162.725 and work its way to test support at 161.75. Support then comes in at the rising 8-DMA is now at 161.375.
Boxed beef cutouts were mixed as choice cutouts fell 2.01 to 266.09 and select increased 1.40 to 252.92. The choice/ select spread narrowed and is at 13.17 and the load count was 118.
Tuesday’s estimated slaughter is 127,000, which is even with last week and above last year’s 123,000. Monday’s slaughter was revised lower to 121,000. The estimated total for the week is 248,000, which is below last week’s 251,000 and above last year’s 242,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trade has been at a standstill in the Southern Plains, Nebraska and Western Cornbelt. 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).
January 1 Cattle Inventory Down 3 Percent
All cattle and calves in the United States as of January 1, 2023 totaled 89.3 million head, 3 percent below the 92.1 million head on January 1, 2022.
All cows and heifers that have calved, at 38.3 million head, were 3 percent below the 39.4 million head on January 1, 2022. Beef cows, at 28.9 million head, were down 4 percent from a year ago. Milk cows, at 9.40 million head, were up slightly from the previous year.
All heifers 500 pounds and over as of January 1, 2023 totaled 19.2 million head, 4 percent below the 19.9 million head on January 1, 2022. Beef replacement heifers, at 5.16 million head, were down 6 percent from a year ago. Milk replacement heifers, at 4.34 million head, were down 2 percent from the previous year. Other heifers, at 9.67 million head, were 3 percent below a year earlier.
Steers weighing 500 pounds and over as of January 1, 2023 totaled 16.1 million head, down 3 percent from January 1, 2022.
Bulls weighing 500 pounds and over as of January 1, 2023 totaled 2.03 million head, down 4 percent from January 1, 2022.
Calves under 500 pounds as of January 1, 2023 totaled 13.6 million head, down 3 percent from January 1, 2022.
Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 14.2 million head on January 1, 2023. The inventory is down 4 percent from the January 1, 2022 total of 14.7 million head. Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 82.5 percent of the total cattle on feed on January 1, 2023, up 1 percent from the previous year. The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) at 25.3 million head, was 3 percent below January 1, 2022.
Calf Crop Down 2 Percent
The 2022 calf crop in the United States was estimated at 34.5 million head, down 2 percent from the previous year’s calf crop. Calves born during the first half of 2022 were estimated at 25.3 million head, down 2 percent from the first half of 2021. Calves born during the second half of 2022 were estimated at 9.16 million head, 27 percent of the total 2022 calf crop.
Revisions
All inventory and calf crop estimates for July 1, 2021, January 1, 2022, and July 1, 2022 were reviewed using calf crop, official slaughter, import and export data, and the relationship of new survey information to the prior surveys. Based on the findings of this review, January 1, 2022 all cattle and calves increased by 0.2 percent and 2021 calf crop increased by 0.2 percent. July 1, 2022 all cattle and calves decreased by 0.2 percent and 2022 calf crop decreased by 0.4 percent.
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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