Walsh Trading Daily Insights
Commentary
March Feeder Cattle behaved like driftwood on Friday, just meandering around the key level at 185.80 all session. The high came in at 186.45 and the low at 185.425 with settlement above the key at 186.10. It was a quiet session after a wild and crazy week of price action in my opinion. It traded within Thursday’s range forming an inside candlestick. If Feeders hold settlement, we could test resistance at 187.10. Resistance then comes in at 188.95. A failure from the low could see price breakdown and test support at 184.375. Support then comes in at the declining 21-DMA now at 183.925.
The Feeder Cattle Index increased and is at 181.45 as of 02/02/2023.
April Live Cattle made a new high for the up move reaching 164.225 for the session. The low came in at 163.55 in a tight trading range as traders are squeamishly bullish as there wasn’t any willingness to push prices lower, but they couldn’t get prices racing higher. Settlement was near the high at 164.125, which is appositive for going into next week. The cash trade this week was on the light side in my opinion as packers are fighting and unwilling to give in to the higher producer asking prices. Yet, on Friday the packers were forced to pay 160.00 for some cattle. Packers reduced the slaughter for this week after last week’s good numbers but, in my opinion, they will have to be more aggressive going forward as weights and supply are in decline and the weather could finally put packers on the defensive. Demand for beef should increase as we move towards spring as the retailers will be preparing for the grilling season. Exports have been excellent in my opinion and the Dollar is way off its highs and JBS has indicated the Chinese will be looking for more beef going forward. This has to be good for producers and could put them in the driver’s seat. We’ll see… If settlement holds, we could test resistance at 164.90. Resistance then comes in at 166.975. A failure from settlement could see price test support at 162.725. and the rising 8-DMA is now at 162.425. Support then comes in at 161.75.
Boxed beef cutouts were lower as choice cutouts dipped 0.36 to 264.74 and select fell 2.05 to 251.61. The choice/ select spread widened and is at 13.13 and the load count was 76.
Friday’s estimated slaughter is 122,000, which is below last week’s 124,000 and above last year’s 114,000. Saturday’s slaughter is expected to be 19,000, which is below last week’s 31,000 and last year’s 46,000. The estimated total for the week is 641,000, which is below last week’s 659,000 and above last year’s 635,000.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading has been slow on light demand in Nebraska and Western Cornbelt. In both regions a few dressed purchases have traded at 250.00. In the Western Cornbelt a few live purchases have traded at 160.00. In Kansas negotiated cash trade has been mostly inactive on very light demand. However, not enough purchases in these regions for a full market trend. In the Texas Panhandle negotiated cash trade has been at a standstill. 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 cash trades for live cattle from 153.00 – 160.000 and from 248.00 – 250.00 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, February 09, 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
888.391.7894
Fax: 312.256.0109
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