Walsh Trading Daily Insights
Commentary
August Feeder Cattle opened higher and dipped down to the session low at 221.15. The low poked through support at the 21-DMA at 221.225 and then raced to the morning high at 223.30, before pulling back to support at 222.225. It resumed the rally and at the end of the day made a new high at 223.375. It settled at 223.10. Futures traders remain determined to be bullish Feeders and with corn unable to hold rallies, bulls were emboldened in my opinion. The cash index is just above 200.00 and the August premium is steep. The index needs to bounce in my opinion or futures could be in trouble. The Monday high was just below resistance at 223.55 and this could be the key for trade on Tuesday, in my opinion. A rally past here could see price run to resistance at 224.475. Resistance then comes in at 225.675. A failure from settlement could see price retest support at 222.225. Support then comes in at the rising 21-DMA and then 220.875.
The Feeder Cattle Index increased and is at 200.01 as of 05/05/2023.
June Live Cattle opened unchanged, down ticked to the low at 161.775 and then rallied to the high at 162.825. It consolidated and settled at 162.425. The high was just above resistance at 162.725 and the low just above support at 161.75. Cash trade weakened and last week’s preliminary average was 173.91 vs 176.94 the previous week. Futures are historically cheap to cash as the discount to cash (5yr ave. around 9.80), so the rally put it better in line with the average. Traders are expecting cash to pull back seasonally and feel the spring high is in, in my opinion. Hence, a struggling futures market. Cutouts remain high but have stalled. Slaughter levels remain soft as packers try to control the market, in my opinion. It is expected that more cattle will be ready to market and packers will continue to work cash lower while trying to maintain exorbitant cutout prices. Telling retailers…. Hey no cattle to slaughter… see slaughter levels down. And then out of the other side of their collective mouth tell producers you are at peak supply, and I really don’t need your cattle but, I’ll take them at a lower price. No collusion, just four major companies disciplined in their approach to the market… independently… If cattle can overtake the high, price could test resistance at the 21-DMa now at 163.925. Resistance then comes in at 164.90. A failure from settlement could see price revisit support at 161.75. Support is nearby at the 100-DMA at 161.425.
Boxed beef cutouts were lower as choice cutouts decreased 0.63 to 308.56 and select fell 3.04 to 285.12. The choice/ select spread widened and is at 23.44 and the load count was 78.
Monday’s estimated slaughter is 126,000, which is above last week’s 123,000 and last year’s 119,000.
The USDA report LM_Ct131 states: not out as I write
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, May 11, 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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tested support at the
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