Walsh Trading Daily Insights
Commentary
March Feeder Cattle continued its consolidation on Friday, trading within resistance at 187.20 and just below support at 185.625. The range was 187.125 high to 185.1625 low. Settlement was at 186.525. Feeder Cattle is in a trading range with the high at 188.575 and the low at 185.55. The cash feeder market has dipped since peaking early in the week at 183.33, this has limited the excitement in Feeders, in my opinion. Settlement was just above the rising 13-DMA now at 186.425 which is a positive Feeders going into the 3-day weekend. If Feeders hold settlement, we could test resistance at the February 7th high (188.575) and then nearby resistance at 188.95. Resistance then comes in at 190.20. A failure from settlement could see price revisit support at 185.80. Support then comes in at the rising 50-DMA now at 184.825.
The Feeder Cattle Index decreased and is at 182.63 as of 02/16/2023.
April Live Cattle opened higher and dipped to the session low at 163.90. Bulls entered the market and took price to a new high for the up move at 165.40. The excitement didn’t last and cattle sagged, trading down to the middle of the range and it settled at 164.65. It was a quiet session as traders seemed to want to take price higher and, but outside market weakness (Equities, Crude Oil) tempered the enthusiasm, in my opinion. The high was above the key level at 164.90 and the low below the rising 13-DMA now at 164.05. Even though cattle made a new high the pullback keeps cattle in its trading range, with a new high for the top of the range and the low at 163.15. Slaughter was below last week’s number as packers continue to lower the kill. Is it because packers are having a tough time finding producers to sell cattle on the cheap and they are doing all they can to not pay up for cattle? And… at the same time make the retail/ service industries fear cattle supply is already diminishing and if they want supply going into the grilling/ summer season they have to be aggressive earlier than normal and pay up for cutouts now?? Stretch out supply and try to force producers to give up their edge as feed, interest, etc.… remain prohibitive for producers?? And… this creates a different picture for the retail/ service industries… they don’t necessarily see this picture and may only see what packers want them to see and keep cutouts high as they compete for imagined diminishing supply. And packers all do this on their own… no meeting to discuss the supply/ demand situation. They are all knowing…. In reality … they do have the most information in front of them, but it’s amazing how they think alike. If futures can overtake resistance at 164.90, we could move towards resistance at 166.975. A failure below the low could see price test support at the rising 21-DMA now at 163.025. Support then comes in at 162.725.
Boxed beef cutouts were higher as choice cutouts increased 1.49 to 281.04 and select surged 3.25 to 265.89. The choice/ select spread narrowed and is at 15.15 and the load count was 70.
Friday’s estimated slaughter is 121,000, which is below last weeks and last year’s 122,000. Saturday slaughter is expected to be 7,000, which is below last week’s 14,000 and last year’s 53,000. The estimated total for the week (so far) is 627,000, which is below last week’s 630,000 and last year’s 670,000.
The USDA report LM_Ct131 states: So far for Friday in the Southern Plains negotiated cash trading has been slow to moderate with light to moderate demand. In the Texas Panhandle, compared to last week, live purchases traded mostly 2.00 higher at 162.00. In Kansas, compared to last week, live purchases traded 1.00-2.00 higher at 162.00. In Nebraska and Western Cornbelt negotiated cash trading has been slow on light to moderate demand. In Nebraska dressed purchases traded steady at 257.00, when compared to the last reported market on Thursday. Not enough live purchases for a market trend. Thursday was the reported live purchase market at 160.00. In the Western Cornbelt not enough live or dressed purchases for a full market trend. Thursday was the most recent reported market with live and dressed purchases at 162.00 and at 257.00, respectively.
The USDA is indicating cash trades for live cattle from 157.00 – 162.50 and from 254.00 – 258.00 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 23, 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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