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DTN Early Word Livestock Comments 06/16 11:32
Further Liquidating Expected
Traders decided to liquidate some cattle futures positions Friday ahead of
the weekend due to concern over continued cash strength. Hogs closed mixed,
with the June contract moving off the board and traders decided to wait for the
direction of a new week.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Lower Live Equiv: $274.84 +0.67*
Hogs: Higher Futures: Higher Lean Equiv: $123.92 +3.60**
*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 came under substantial pressure Friday, which mounted as
futures moved lower and stops were triggered. Contracts were under pressure
from the opening bell, with all but the June live cattle contract closing the
chart gaps that had remained below the market. The March feeder cattle contract
also closed a gap. However, the negative reaction at the beginning of the day
left some gaps at the open. The negative technical aspect is that traders were
not content to close the chart gaps but pushed contracts significantly lower.
Follow-through selling may be expected Monday. Cash cattle traded steady to
$5.00 higher as they had earlier in the week, leaving little negative
fundamentals. However, traders seemed to focus on the steady cash trade for
live cattle that had not been seen for eight weeks. Boxed beef prices were
higher, with choice up $1.16 and select up $0.43. The Commitment of Traders
showed fund traders bought 6,990 live cattle contracts, moving their net long
position to 131,728 contracts. Fund traders added 985 long positions to feeder
cattle, taking their long position to a record 34,624 contracts.
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