October Live Cattle displayed weakness in front of the Cattle on Feed and Semi-Annual Cattle Inventory reports. It opened higher and made the high at 183.60, it then fell to the low at 181.525 and that was it. Trade was over by 9:30 CDT and price consolidated in the lower end of the range the rest of the session, settling near the low at 181.90. Cash traded strong this week with the South trading higher than last week at 180.00 and the North reached as high as 191.50 on a live Basis (so far). Dressed sales took place from 290.00 to 300.00 (so far). Cutouts remain weak and therefore packers aren’t happy, in my opinion. They continue to curtail slaughter levels and slaughter this week is estimated at 628,000. Weights are starting to climb (which is what packers desire, in my opinion) and they are working to force producers to lower their offers. They paid up this week but now with the COF and CI reports out where will prices end up? On Thursday, October cattle put in a Bearish Engulfing candlestick. Today’s price action was to the downside. I think the COF had a bearish placement number. CI was neutral for me. A lower open could see pressure on cattle. Support is at 181.175. A break below here could see a test of support at 179.40. If settlement holds, we could test resistance at 182.375.
Boxed beef cutouts were higher as choice cutouts increased 0.18 to 302.74 and select increased 2.02 to 276.73. The choice/ select spread narrowed and is at 26.01 and the load count was 103.
Friday’s estimated slaughter is 118,000, which is below last weeks and last year’s 121,000. Saturday slaughter is expected to be 15,000, which is above last week’s 8,000 and below last year’s 49,000. The estimated slaughter for the week is 628,000, which is below last week’s 633,000 and last year’s 663,000.
The USDA report LM_Ct131 states: So far for Friday in all major feeding regions negotiated cash trade has been slow to moderate with moderate demand. In the Texas Panhandle, compared to the last reported market on Thursday, Live FOB purchases traded steady at 180.00. In Kansas, compared to the last reported market on Thursday, Live FOB purchases traded mostly steady at 180.00, with a few up to 187.00. Noted, for Friday, in Kansas Live Delivered purchases traded from 184.00-185.00. In Nebraska, compared to the last reported market, Live FOB purchases traded mostly steady at 188.00, with a few up to 191.50. Compared to last week Dressed Delivered purchases traded 3.00-5.00 higher at 295.00, with a few up to 298.00. In the Western Cornbelt not enough Live FOB or Dressed Delivered purchases for a full market trend. The last reported Live FOB purchase market was on Thursday at 188.00. Last week Dressed Delivered purchases traded from 290.00-295.00. Noted, for Friday, Dressed FOB purchases traded at 300.00.
The USDA is showing cash trades for live cattle from 180.00 -191.50 and from 290.00 – 300.00 on a dressed basis (so far).
August Feeder Cattle has put in an ugly looking Head and Shoulders top formation. Thursday saw price settle below the neckline. Today’s action was inside Thursday’s trading range. The high was 247.575, the low was 244.85 and settlement was at 245.925. Corn weakened which is normally helpful for Feeders but Cattle was weak which Feeder’s have been paying attention too lately. Hence an inside candlestick on Friday. Traders un sure of where to take price. Placements were bearish against expectations in my opinion. This could pressure Feeders. A breakdown below the Friday low could see price test support at the rising 21-DMA now at 243.50. Support then comes in at 242.475. If price can hold settlement, we could test resistance at 248.85. Resistance then comes in at 249.95. If this is breached the H&S formation is canceled, in my opinion.
The Feeder Cattle Index increased and is at 238.96 as of 7/20/2023.
United States Cattle on Feed Down 2 Percent
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.2 million head on July 1, 2023. The inventory was 2 percent below July 1, 2022. The inventory included 6.73 million steers and steer calves, down 3 percent from the previous year. This group accounted for 60 percent of the total inventory. Heifers and heifer calves accounted for 4.47 million head, unchanged from 2022.
Placements in feedlots during June totaled 1.68 million head, 3 percent above 2022. Net placements were 1.61 million head. During June, placements of cattle and calves weighing less than 600 pounds were 390,000 head, 600-699 pounds were 275,000 head, 700-799 pounds were 380,000 head, 800-899 pounds were 368,000 head, 900-999 pounds were 185,000 head, and 1,000 pounds and greater were 80,000 head.
Marketings of fed cattle during June totaled 1.96 million head, 5 percent below 2022.
Other disappearance totaled 69,000 head during June, unchanged from 2022.
July 1 Cattle Inventory Down 3 Percent
All cattle and calves in the United States on July 1, 2023 totaled 95.9 million head, 3 percent below the 98.6 million head on July 1, 2022.
All cows and heifers that have calved totaled 38.8 million head, 2 percent below the 39.6 million head on July 1, 2022. Beef cows, at 29.4 million head, down 3 percent from a year ago. Milk cows, at 9.40 million head, unchanged from previous year.
All heifers 500 pounds and over on July 1, 2023 totaled 15.0 million head, 4 percent below the 15.6 million head on July 1, 2022. Beef replacement heifers, at 4.05 million head, down 2 percent from a year ago. Milk replacement heifers, at 3.65 million head, down 3 percent from previous year. Other heifers, at 7.30 million head, 5 percent below a year earlier.
Steers 500 pounds and over on July 1, 2023 totaled 13.9 million head, down 3 percent from July 1, 2022.
Bulls 500 pounds and over on July 1, 2023 totaled 1.90 million head, down 5 percent from previous year.
Calves under 500 pounds on July 1, 2023 totaled 26.3 million head, down 3 percent from a year earlier.
Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 13.1 million head on July 1, 2023, down 2 percent from previous year. Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 85.5 percent of the total cattle on feed on July 1, 2023, up slightly from previous year. The total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots), at 34.4 million head, down 4 percent from the 35.7 million head on July 1, 2022.
Calf Crop Down 2 Percent
The 2023 calf crop in the United States is expected to be 33.8 million head, down 2 percent from last year. Calves born during the first half of 2023 are estimated at 24.8 million head, down 2 percent from the first half of 2022. An additional 9.00 million calves are expected to be born during the second half of 2023.
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, July 27, 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
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