Walsh Trading Daily Insights
Commentary
April Feeder Cattle gap opened lower, closed the gap at the session high at 195.475 and the broke down the rest of the session to the low at 192.65. It bounced at the end of the session to settle at 193.25. Outside market worries the lead cause of the decline as crashing equities and crude oil, while a rally in the dollar helped put fear in livestock markets. The decline in Feeders took price below support at 193.00, but it was able to come back and get just above it at settlement. If Feeders can hold settlement, price could test resistance at 195.40. Resistance then comes in at 197.975. A failure settlement could see price test support at 190.60. Support then comes in at 188.95.
The Feeder Cattle Index decreased and is at 189.39 as of 03/14/2023.
April Live Cattle also gap opened lower and closed its gap at the high at 162.90. It broke down and traded to the low at 161.10 and settled near the low at 161.55.Banking system problems caused widespread fear in the commodity markets and cattle was no exception. The fallout continued from the failure at SVB as Swiss bank Credit Suisse faced issues of its own and sent commodities in a tail spin, leading to concerns about the economic outlook and will consumers have any money in the bank to pay for meat. There already is concern that consumers won’t have enough money to buy meat as cutout prices have risen and now banking system integrity is another thing for traders to worry about. The government has stepped to try to stem the tide, but we need banks to focus on banking and earning money than unnecessary social programs that is robbing depositors and investors as they take their eye off the ball, in my opinion. Hopefully, this is an isolated incident and we go back to fundamentals and banks stay in their sphere of influence and things calm down. We’ll see…. We still have a small gap in place above the market from Friday’s low at 164.225 to the Monday high at 164.00. We busted through support at the rising 50-DMA now at 162.45 and then 161.75 settling below them. Follow-through to the down side could see support tested at 160.75 and then 159.075. If the outside markets calm down and some confidence comes back that the system is safe, we could see cattle come back and if we hold settlement, it could test the 50-DMA and then resistance at 162.725.
Boxed beef cutouts were lower as choice cutouts decreased 1.64 to 284.27 and select declined 1.93 to 272.63. The choice/ select spread widened and is at 11.64 and the load count was 111.
Wednesday’s estimated slaughter is 126,000, which is even with last week and above last year’s 123,000. The estimated total for the week is 378,000, which is even with last week, and above last year’s 370,000.
The USDA report LM_Ct131 states: Thus far Wednesday negotiated cash trade was limited on moderate demand in the Southern Plains. Compared to Tuesday live purchases traded mostly steady with live purchases from 163.00-164.00, mostly at 164.00. In Nebraska trade and demand were moderate. Compared to last week in Nebraska live and dressed purchases traded 1.00 lower at 164.00 and 264.00 respectively. In the Western Cornbelt trade was light on moderate demand. A few live purchases were reported from 164.00-164.50 and dressed purchases from 263.00-264.00, however not enough for an adequate market test. The latest established market in the Western Cornbelt was last week with live purchases from 164.00-167.00 with dressed purchases at 265.00.
The USDA is indicating cash trades for live cattle from 161.50 – 166.00 and from 260.00 – 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 16, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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