Walsh Trading Daily Insights
Commentary
April Feeder Cattle was in limbo on Friday, just drifting within Thursday’s trading range as it waited for the cattle on feed report. The high was at 195.125 and the low at 193.775 with settlement at 194.65. The low was just below the rising 21-DMA now at 194.025 and the high was below resistance at 195.40. If Feeders can hold settlement, price could test resistance at 195.40. Resistance then comes in at 197.975. A failure from the low could see price test support at 193.00 and then work its way lower to test support at 190.60. Support then comes in at 188.95.
The Feeder Cattle Index decreased and is at 187.87 as of 03/16/2023.
June Live Cattle is now the lead contract as its volume has surpassed the volume in the April contract. It opened higher and ticked to the session high at 157.05 then broke down to the session low at 155.70. It came back and settled at 156.40. The early break down took price below support at 156.30, while the high stopped short of resistance at 157.25. Once again, weakness in equity and crude oil markets helped pressure cattle, but the upcoming cattle on feed report helped stabilize cattle as we moved past mid-session. The report came in near expectations, (see below), but it points to continuing declines in feedlots. It continues to indicate dwindling cattle supply. The supply issue continues to keep the cattle outlook bullish in my opinion, but the outside market influence, with recession fears, potential bank problems and a wide variety of other possibilities continue to keep the cattle producer and prices on edge as packers are fantastic at using anything they can to keep price in their control. If price can hold settlement, we could revisit resistance at 157.30. Resistance then comes in at the 100-DMA, now at 158.65 and then 159.075. A breakdown below 156.30 could send price down to test support at 155.10. Support then comes in at 153.025.
Boxed beef cutouts were mixed as choice cutouts decreased 0.60 to 283.35 and select increased 0.68 to 272.44. The choice/ select spread narrowed and is at 10.91 and the load count was 79.
Friday’s estimated slaughter is 113,000, which is below last week’s 114,000 and above last year’s 100,000. Saturday slaughter is expected to be 17,000, which is below last week’s 18,000 and last year’s 42,000. The estimated total for the week is 631,000, which is below last week’s 634,000, and last year’s 636,000.
The USDA report LM_Ct131 states: Thus far Friday negotiated cash trade was mostly limited on light demand in all feeding regions. Not enough purchases in any feeding region for an adequate market test. The latest established market in the Southern Plains was on Wednesday, with live purchases mostly at 164.00. On Wednesday in Nebraska, live purchases traded at 164.00 with dressed purchases at 264.00. In the Western Cornbelt live purchases on Wednesday traded from 163.00-165.00, mostly from 164.00-164.50 with dressed purchases from 263.00-264.00 mostly at 264.00.
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).
Cattle on Feed
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.6 million head on March 1, 2023. The inventory was 4 percent below March 1, 2022.
Placements in feedlots during February totaled 1.73 million head, 7 percent below 2022. Net placements were 1.68 million head. During February, placements of cattle and calves weighing less than 600 pounds were 345,000 head, 600-699 pounds were 315,000 head, 700-799 pounds were 470,000 head, 800-899 pounds were 424,000 head, 900-999 pounds were 130,000 head, and 1,000 pounds and greater were 50,000 head.
Marketings of fed cattle during February totaled 1.74 million head, 5 percent below 2022. Other disappearance totaled 58,000 head during February, 2 percent below 2022
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
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