Walsh Trading Daily Insights
Commentary
May Feeder Cattle opened higher and traded to the session low at 204.525. It reversed course and raced to the session high at 206.85. All by 9 AM CDT…. Boom … rally over. It broke down again and approached the low then climbing and settling at 205.25. The rally and subsequent decline could be interpreted as a topping action as it raced above the Bollinger Band and the fallback left a large shadow forming an Inverted Hammer Candlestick or a Shooting Star. With the strong Rally an large green candlestick, this combo is 2/3s of a potential Evening Star Candlestick Formation. To complete this formation, Monday’s trade must trade lower. This would indicate a potentially bearish nature to the Feeders. We’ll see…! The surge saw price approach resistance at 207.50, fail and then settle just above the key level at 205.15. If price trades below 205.15, we could see a test of support at 202.10. Support then comes in at the rising 8-DMA now at 201.00. If settlement holds, we could revisit the high.
The Feeder Cattle Index increased and is at 193.34 as of 03/30/2023.
June Live Cattle continued to leap higher… opening higher, making the low at 160.90 and then rallying the rest of the session to the high at 162.175. Unlike Feeders, settlement was near the high at 162.175. There is optimism that producers at this time are in control of price in the cash market and are leading futures higher. There was more cash trade on Friday with a new high price set for cattle at 173.00. Slaughter surged this week to 651,000 from last week’s 626,000 at higher prices. My producers told me packers were buying them for next week and then taking them right away instead of waiting for next week. What could this mean? Do packers need the meat for orders and are desperate because of lower production because of lower previous slaughter and lower weights. Or… are they trying to say they paid up for cattle this week to turn price lower the following weeks as hey we met our needs and don’t need any cattle… but we’ll take your cattle at this lower price? Hey producers… you guys know we are historically entering the season with normally higher levels of cattle for slaughter, I’ll take those cattle at lower prices. We’ll see…. The rally took price past resistance as both the high and settlement was above resistance at 161.75. The next nearby hurdle for June Cattle is the 50-DMA, now at 162.375. Resistance at 162.75 is next. A breakout above here puts resistance at 164.90 in play, in my opinion. A breakdown from settlement could see support at 161.75 tested and then 160.75.
Boxed beef cutouts increased as choice cutouts surged 2.87 to 282.07 and select jumped 2.26 to 270.72. The choice/ select spread widened and is at 11.35 and the load count was 90.
Friday’s estimated slaughter is 120,000, which is above last week’s 108,000 and last year’s 109,000. Saturday slaughter is expected to be 26,000, which is above last week’s 16,000 and below last year’s 40,000. The estimated total for the week (so far) is 651,000, which is above last week’s 626,000 and last year’s 639,000.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading in Kansas has been at a standstill. In the Texas Panhandle and Nebraska negotiated cash trading has been mostly inactive on light demand. In the Western Cornbelt negotiated cash trading has been limited on light demand. Not enough purchases in any region for full market trend. Thursday was the last reported market in all regions. In the Texas Panhandle live purchases traded from 165.00-167.00. In Kansas live purchases traded at 167.00. In Nebraska live and dressed purchases traded from 168.00-172.00 and from 270.00-272.00, respectively. In the Western Cornbelt live and dressed purchases traded at 170.00 and from 270.00- 272.00, respectively..
The USDA is indicating cash trades for live cattle from 164.00 – 173.00 and from 265.00 – 275.00 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, April 06, 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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Fax: 312.256.0109
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