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DTN Early Word Livestock Comments 05/19 06:23
Further Liquidation May Take Place
The liquidation in cattle futures may have run its course with the market
bouncing into the weekend. Cash was not bearish, but traders will be cautious
to begin the week. Hog futures closed mixed, holding onto gains, but the cash
drop was bearish and may pressure the market.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Mixed Live Equiv: $257.64 +$1.96*
Hogs: Lower Futures: Lower Lean Equiv: $105.94 +$0.65**
*Based on the formula estimating live cattle equivalent of gross packer
revenue. (The Live Cattle Equiv. The index has been updated to depict recent
changes in live cattle weights and grading percentages.)
** based on formula estimating lean hog equivalent of gross packer revenue.
GENERAL COMMENTS:
Cattle futures posted a negative week, not because of cash but because of an
overbought market. Cash did not perform as well as in the past few weeks, but
was not bearish either. The market took a breather, but traders supported
futures into the weekend. Southern cash cattle traded mixed from $1.00 lower to
$1.00 higher, with Northern dressed cattle averaging $2.00 higher. This was not
bearish but was a bit disappointing to traders. Packers had a significant
amount of cattle purchased ahead and did not need to be as aggressive. It is
uncertain as to their position moving into this week. Boxed beef prices remain
supportive with choice up $2.59 and select up $3.21. Feeder cattle trade at
auctions reflected the decline in futures with prices lower in most classes.
The Commitments of Traders report showed fund traders adding 2,278 live cattle
long futures contracts, bringing their net-long position to 127,889. There were
2,475 long futures positions added to feeder cattle, bringing their net-long
position to 30,795 contracts.
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