CATTLE: Continued Advance Beef Prices and Positive Cold Storage report
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June cattle closed lower on the session yesterday with a quiet inside trading session. Continued concerns with higher than expected placements last month helped to pressure the market. The market seems to be correcting the overbought status from April 13 with choppy to lower consolidation-type trade. Weakness in the stock market is seen as a negative force with traders already worried about demand due to historically high beef prices. The USDA boxed beef cutout was down 34 cents at mid-session yesterday but closed 51 cents higher at $307.63. This was up from $307.06 the previous week and was the highest it had been since September 22, 2021.
Cash live cattle was light on Tuesday, with 650 head reported in Iowa/Minnesota at $172.50-$180 and an average price of $175.29 versus an average of $180.54 last week. Volume was on the light side and may not have been enough to adequately test the market. For the monthly USDA cold storage report, frozen beef stocks at the end of March came in at 480.9 million pounds, down 10.3% from last year and down 3.9% from February. Stocks normally decline 1.3% for the month so the 3.9% decline is considered a bullish development. The USDA estimated cattle slaughter came in at 128,000 head yesterday. This brings the total for the week so far to 252,000 head, up from 249,000 last week and 250,000 a year ago.
MARKET IDEAS
The large discount of June to the cash is a factor which may continue to support, and a positive USDA Cold Storage report and the continued advance in the beef market to the highest since September 22, 2021 may help support. Support for June cattle is at 163.10, with resistance at 166.27 and 167.77 as next resistance. Support for December Cattle at 170.75, with 173.77 and 174.92 as next upside targets.