Walsh Trading Daily Insights
Commentary
May Feeder Cattle opened lower and traded to the session low at 200.175. It was a head fake to the downside, turning higher and rallying the rest of the day to a new high on the continuous chart at 202.625. It settled near the high at 202.525. Enthusiasm came back to the Feeders after yesterday’s consolidation as traders seem to believe cattle feeders have to be aggressive to buy cattle for their yards as supply at this time is limited. Price once again navigated between the support/ resistance area from 202.10 to 200.75, trading above the high end and below the low end. It settled just above resistance and any follow through to the upside could see price test resistance at 205.15. Resistance then comes in at 207.50. If price trades below 202.10, we could see more consolidation as price would likely return to support at 200.75. Support then comes in at the rising 8-DMA now at 199.05.
The Feeder Cattle Index down ticked and is at 191.27 as of 03/28/2023.
June Live Cattle opened unchanged and ticked lower to the low at 158.925. It grinded higher the rest of the session to the high at 159.675. It settled just under the high at 159.65. Packers didn’t trade any cash on a live basis, but we did see a couple of prints on a dressed basis from 265.00 to 271.00. The rally took us past the confluence of resistance on my continuous chart at the rising 100-DMA now at 158.975, the declining 13-DMA now at 158.40 and resistance at 159.075. The target for me now is for price to test resistance at 160.75. The April contract continues to move higher and this is putting packers in a bind in my opinion as they are now the ones with the hope trade. Hoping futures back down and producers get nervous and sell cattle cheaper. Not likely, in my opinion… At least that’s what I hope… That producers hold out and cash trades higher. With Feeder prices climbing and corn once again showing some strength, producers need a strong fat market, once again in my opinion. If price can hold settlement, we could test resistance at 160.75. A breakdown from the 100-DMA could see price move toward support at 157.25 and the gap from the Monday low at 156.95 and the Friday high at 156.85.
Boxed beef cutouts were lower as choice cutouts decreased 0.34 to 280.29 and select decreased 1.46 to 268.90. The choice/ select spread widened and is at 11.39 and the load count was 114.
Wednesday’s estimated slaughter is 127,000, which is above last week’s 126,000 and last year’s 125,000. The estimated total for the week (so far) is 379,000, which is above last week’s 378,000 and last year’s 370,000.
The USDA report LM_Ct131 states: So far for Wednesday negotiated cash trading has been at a standstill in the Southern Plains and Nebraska. In the Western Cornbelt negotiated cash trading has been mostly inactive with very light demand. Not enough purchases for a market trend. In all regions the latest established market was last week. In the Southern Plains live purchases traded at 163.00. In Nebraska live and dressed purchases traded from 164.00-165.00 and dressed at 265.00, respectively. In the Western Cornbelt live and dressed purchases traded from 165.00-166.00 and at 265.00, respectively.
The USDA is indicating no cash trades for live cattle and from 265.00 – 271.00 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 30, 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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