April live cattle gap opened higher on Wednesday, March 22, 2017, (Tuesday high -120.075 – Wednesday low – 120.15) and never looked back as it reached its allowable limit up move of 3 cents/ pound during the fedcattleexchange auction. Price then consolidated within a 1c/ lb range 121.90 low to 122.90 high) for the rest of the day. It ended the session at 122.375. The fedcattleexchange auction had 3,928 cattle for sale from Nebraska, Texas and Kansas. 2,195 head were sold with most of the sales coming from Nebraska.
The range in Nebraska was from $133.00 to $136.50. Texas had a couple of sales and they were at $128.00 and 129.50. Kansas had one sale at $130.00. After the auction, cash trade was limited on light demand. There were some dressed sales in Kansas at $212 for 15 – 30 day delivery. Nebraska had some live sales at $131.00. Trade was inactive in other regions.
Boxed beef cutout values were lower on Choice higher on Select. Demand was light and Choice was down $1.93 to $223.00, while Select was $0.39 higher at $215.80. Cattle slaughter is estimated at 116,000, higher than last week’s 113,000 and last year’s 106,000. Futures raced past the January 19th high (121.45) and stalled because of the limit restrictions. The close above the January 20 high puts the May 2016 high (124.675) in focus.
Resistance then comes in at 127.20 and 129.10. A failure from the Wednesday high could lead to a test of support at the January 19th high, then the 8 DMA (118.85) and then the 13 DMA (117.775). The Cold Storage Report came out after the close for February and it showed total red meat supplies in freezers were up 1% from the previous month, but it is down 6% from last year. Total pounds of beef in freezers were down 7% from the previous month and down 1% from last year.
April feeder cattle broke out to the upside from the inside candle formation, rallying just past resistance (136.80) to the high of the day at 137.10. It ended the session just below resistance at 136.525. This has been an impressive rally. There haven’t been any pullbacks since breaking out above the March 8th high (123.625). It is at another important resistance level (136.80). There is a lot of congestion just above here from the consolidation area from April 2016 to August 2016. Feeder cattle could struggle in this area. There is resistance at 139.775 and then 142.625. Support is at 133.00 and the 131.75.
April lean hogs consolidated today, forming an inside candle formation and a spinning top candle. Today’s range was inside Tuesday’s high and low and the candle body was narrow. A breakout from the inside candle could lead to lean hogs next move. Trading below the Wednesday low (67.925) could lead to a test of support at 64.90. Breaking above the high (68.725) could lead to a test of resistance at 70.00 and then the March 14 high at 71.275. The Cold Storage Report showed frozen pork supplies up 9% from the previous month, but down 9% from last year. Stocks of pork bellies were up 15% from last month, but were down 74% from last year.