Cattle Consolidates in Front Of Cattle on Feed

Cattle & Beef - Angus Cow

August Feeder Cattle opened unchanged, broke down to the low of the day at 259.10 and then rallied into mid-session to the high at 262.05. It couldn’t sustain the rally and pulled back to settle at 260.225. The early breakdown took price to support at the rising 8-DMA, now at 259.45. The recovery bounce took price to resistance at 262.075. The pullback and settlement took price below the key level at 261.05. Thursday saw price rally to a new high for the up move at 263.375 and then pullback and settle near the session lows. Friday was follow-through to support in front of the cattle on feed report. The report in my opinion was neutral as compared to expectations. The cash market saw a nice increase on Friday, breaking the psychological 250.00 barrier, putting the all-time high for the index (254.10) in its sights, in my opinion. The testing of the 8-DMA and holding was good for the market in my opinion and if it holds on Tuesday could send futures past the Friday high. The Thursday high is next and then the all-time high at 264.675, established on September 15, 2023, when October 2023 was the lead contract. A failure from settlement could see price re-test support at the 8-DMA. Support then comes in at 257.925.

The Feeder Cattle Index increased and is at 250.14 as of 05/23/2024. 

August Live Cattle gap opened lower and broke down to the session low at 180.225. It was able to find support just above the 100-DMA @ 179.975 and rally until late in the morning to the high at 182.075. This was just under the Thursday high at 182.15 and below resistance at 182.575. A pullback followed and it settled at 181.125. Settlement was below the key level at 181.175. The two-sided interplay came about as the cash market had a strong end to the week and the cattle on feed report was due out after the close, giving the market some volatility. The cash market traded to new heights this week as the packer was aggressive in buying cattle for a short week of slaughter. The paid up to 193.50 for live cattle and 305.00 for dressed cattle. The live price, I believe, was the highest price to appear on the mandatory report, topping the 193.00 print in March. The 305 print was just below last week’s 306.00 high. It is looking like we could get another new all-time high cash average this week. The high cash saw traders buying futures but the upcoming cattle on feed report took some of the strength out of the price action as traders are wary of reports and what surprises they may show. This week’s report came in line with expectations(see below), but I will consider it somewhat bullish as the on-feed number showed less cattle in feedlots than the prior year. Most analysts complain that even with lower placements, we have maintained a lead over the prior year on these reports. So, a lower number shouldn’t have people complaining. Weights continue their trek higher, enabling producers to tack on more money to their cause as cost of gain gives them an advantage. Packers long for the heft as the numbers aren’t there as they need something to keep production  at higher levels to complete their orders. My producers tell me that when the packer sees the cattle, they buy them and say put more weight on those 1,450 #ers. They are happy to feed them. We are coming to a time when we could get short cattle and the cattle coming will be calf-feds, meaning they will be lighter and probably not be able to add lots of weight as their frames won’t likely handle any needed increase. That’s why in my opinion the purchases recently of cattle with time and coming due in June. It could be that once these heavy cattle are moved, we could see a drop in weights and a dire need for maybe more cattle purchases to meet packer needs. We’ll see!... As far as demand for beef these days, and a worry that Memorial weekend will not fare well as features will be few. I can only speak right now for my area, but T-Bone and Porterhouse steaks are on special for $6.99 and $7.49/ # respectively. They were hard to find… If price can get above 181.175, it could test resistance at 182.575. Resistance then comes in at 184.35. If price can’t hold settlement, it could re-test support at the 100-DMA. Support then comes in at 179.40.

Boxed beef cutouts were higher as choice cutouts increased 0.61 to 310.45 and select increased 1.64 to 301.72. The choice/ select spread narrowed and is at 8.73 and the load count was 107.

Friday’s estimated slaughter is 117,000, which is above last week’s 102,000 and below last year’s 117,764. Saturday slaughter is expected to be 4,000, which is below last year’s 9,000 and last year’s 7,740. The estimated slaughter for the week (so far) is 607,000, which is above last week’s 598,000 and below last year’s 625,035.

The USDA report LM_Ct131 states: Thus far for Friday in the Texas Panhandle negotiated cash negotiated cash trade has been mostly inactive on light demand. On Thursday in the Texas Panhandle live FOB purchases traded at 187.00. In Kansas, Nebraska and the Western Cornbelt negotiated cash trade has been slow on light demand. Compared to Thursday in Kansas live FOB purchases traded steady at 187.00. On Thursday in Nebraska, live FOB purchases traded at 192.00, with a few purchases up to 193.50 and dressed delivered purchases traded at 304.00, with a few up to 305.00. On Thursday in the Western Cornbelt, live FOB purchases at 192.00, with a few up to 193.00. Last week dressed delivered purchases traded at 300.00, with a few up to 306.00.

The USDA is indicating cash trades for live cattle from 185.00 – 193.50 and from 298.00 – 305.00 on a dressed basis (so far).

United States Cattle on Feed Down 1 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 11.6 million head on May 1, 2024. The inventory was 1 percent below May 1, 2023. 

Placements in feedlots during April totaled 1.66 million head, 6 percent below 2023. Net placements were 1.60 million head. During April, placements of cattle and calves weighing less than 600 pounds were 335,000 head, 600-699 pounds were 220,000 head, 700-799 pounds were 375,000 head, 800-899 pounds were 451,000 head, 900-999 pounds were 205,000 head, and 1,000 pounds and greater were 70,000 head.

Marketings of fed cattle during April totaled 1.87 million head, 10 percent above 2023. Other disappearance totaled 56,000 head during April, 10 percent above 2023.

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, May 28, 2024, 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.

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**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


Fax: 312.256.0109

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