Walsh Trading Daily Insights
Commentary
April Feeder Cattle surged early in the trading session, making the low on the open at 193.725 and blasting off to the high at 196.175 by 9:30 AM CST. It was all over, and price drifted the rest of the session near the high and settled at 196.025. The rally occurred even as corn prices were staging a rally as the cash index is starting to break out from its doldrums as feeder buyers are paying up for much needed cattle. The index has climbed more than 3 handles since making its low on Tuesday. Expectations are for continued strength going forward as futures are once again getting extended. The rally took price past resistance at 195.40, but it stopped short of the Wednesday high at 196.825. If Feeders can hold settlement, price could revisit the Wednesday high. Resistance then comes in at 197.975. A failure to hold 195.40 could see price pullback and test the Thursday high at 194.55. Support then comes in at 193.00.
The Feeder Cattle Index increased and is at 185.43 as of 03/02/2023.
April Live Cattle recovered from its Thursday stupor, making the low in its 1st 10 minutes at 164.075 and then rallying to the high at 165.85. All finished by 10:15 AM CST. A pullback to near 164.90 support and a settlement above it at 165.425 ended the week on a strong note. The Thursday breakdown seems to happen when packers decide they want to wait until Friday to buy cattle and attempt to get on producers’ nerves to get lower prices. This worked for the most part when cattle were plentiful, but it doesn’t seem to be working now in this time of reduced cattle as they paid up to 167.00 on a live basis (mandatory report) on Friday as producers held out and won the day, in my opinion. I’ve been told that after 2pm they also bought cattle at 267.00 on a dressed basis that should be reflected on the Monday morning report. We’ll see… Cash looks firm and maybe speculators are becoming more comfortable taking some risk as we near all-time highs on the continuous cart for the lead contract at 172.75. (Based on volume). Futures are still leaning on support at 164.90 and must maintain this level or we could see a breakdown to support at 162.75. So far, it is holding the line settling above it after opening below support. It didn’t take out last Friday’s high (166.40), but if we hold settlement, that’s the next target, in my opinion. Resistance then comes in at 166.975.
Boxed beef cutouts were mixed as choice cutouts increased 0.82 to 289.32 and select was decreased 0.72 to 276.86. The choice/ select spread widened and is at 12.46 and the load count was 77.
Friday’s estimated slaughter is 117,000, which is below last week’s 122,000 and last year’s 121,000. Saturday slaughter is expected to be 11,000, which is below last week’s 18,000 and last year’s 36,000. The estimated total for the week (so far) is 629,000, which is above last week’s 618,000 and last year’s 659,000.
The USDA report LM_Ct131 states: So far for Friday in Kansas negotiated cash trade has been active on good demand. In the Texas Panhandle negotiated cash trade has been slow with moderate demand. Compared to last week, in the Southern Plains, live purchases traded 1.00 higher at 165.00. In Nebraska and Western Cornbelt negotiated cash trading has been slow to moderate on moderate demand. In Nebraska, compared to last week, dressed purchases traded 3.00 higher at 265.00. A few live purchases traded at 165.00, however, not enough for a market trend. Last week live purchases traded at 164.00. In the Western Cornbelt live purchases traded 1.00 higher from 165.00-166.00 and dressed purchases traded 3.00 higher at 265.00, with both live and dressed compared to the last reported market on Thursday.
The USDA is indicating cash trades for live cattle from 161.00 – 167.00 and from 262.00 – 265.00 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, March 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
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