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DTN Early Word Livestock Comments 01/20 06:07
Cattle Futures Are Expected to Rebound
Cattle futures took it on the chin ahead of the extended weekend with a
rumor of the New World screwworm (NWS) in the U.S. floating around. Traders
were not willing to remain exposed just in case. Hog futures posted minor
gains, with traders questioning why cash trading is so light.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Higher Live Equiv: $267.93 +$1.06*
Hogs: Higher Futures: Mixed Lean Equiv: $99.98 +$0.57**
*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:
The trading action in cattle shows how vulnerable the market will be if a
case of the New World screwworm (NWS) is found in the U.S. A rumor circulated
that one was detected, immediately impacting the market. However, that is false
as there has been no confirmation of a case. This should cause the market to
rebound today as traders may turn into buyers again due to positive
fundamentals. Feeder cattle led the charge lower and will lead the charge
higher. However, traders may retain a level of caution just to make sure. The
cash cattle trade was a bit disappointing, with prices steady for both Southern
live and Northern dressed cattle. Boxed beef prices were higher on Monday, with
choice up $1.95 and select up $0.14. The Commitment of Traders report showed
the fund traders adding 6,622 futures contracts in live cattle last week,
bringing their net-long position to 100,338. They reduced their net-long
position in feeder cattle by 343 contracts to 17,048.
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