Walsh Trading Daily Insights
Commentary
May Feeder Cattle opened higher and traded to the session low at 203.75. It turned around and grinded higher the rest of the session to the high at 205.95. It settled near the high at 205.625. The opening decline closed some of the gap created from the Wednesday high at 203.30 to the Thursday low at 204.225. Enthusiasm in the cattle markets for higher cash prices set the stage for Feeders as corn prices also grinded higher on Monday. Settlement was above the key level at 205.15 and this puts resistance at 207.50 in play, in my opinion. If price trades below 205.15, we could see a test of support at the rising 8-DMA now at 203.75. Support then comes in at 202.10.
The Feeder Cattle Index decreased and is at 193.33 as of 04/07/2023.
June Live Cattle opened higher and then broke down to the session low at 162.55. The low tested support at 162.65 and the nearby rising 50-DMA at 162.475. Bulls took over and prices grinded higher the rest of the day to the high at 164.15. It settled nearby at 163.70. The rally took price took price to a new high for the June contract and into the gap on the continuous chart formed when the April contract gap opened lower on March 13th making its high at 164.00 from the 164.225 low on March 10th. Enthusiasm continues to build that packers will continue to pay up for cattle as we head into 2nd week of April. Cash was strong last week, with the 5-day, 5-area weighted average price at 175.28, which surged from the previous week’s average 168.85. Producers are expecting price to stay up here and continue higher as it looks more and more with weights down and supplies tight, packers will have to compete for cattle instead of sitting back and letting the cattle come to them. Times are changing and I don’t think packers like it. The grilling season is just around the corner and the tight supplies could lead to a later seasonal peak in cash prices than normal, in my opinion. A continuation higher could see resistance at 164.90 tested, in my opinion. A breakdown from settlement could see support revisited.
Boxed beef cutouts increased as choice cutouts jumped 1.93 to 292.91 and select surged 2.62 to 278.40. The choice/ select spread narrowed and is at 14.51 and the load count was 69.
Monday’s estimated slaughter is 113,000, which is below last week’s 117,000 and last year’s 123,000.
The USDA report LM_Ct131 states: So far for Monday 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 on very light demand. Not enough purchase for a market trend. The latest established market was last week in all regions. In the Southern Plains live purchases traded at 170.00. In Nebraska and Western Cornbelt live and dressed purchases traded from 174.00-177.00 and from 275.00-280.00, respectively.
The USDA is indicating cash trades for live cattle 175.00 and nothing 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 13, 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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