Daily Ag Market Commentary - Live cattle futures were sharply higher

US - Livestock:
calendar icon 8 March 2007
clock icon 2 minute read
Live cattle futures were sharply higher on Wednesday. New contract highs were reached across the board. The lower early trade was shook off with ease as the morning beef report showed a $4 increase in Choice prices with the Choice-Select spread widening $4 from about $6 to about $10. This encouraged the bulls, which didn't need much encouragement, helped by fund buying and buy stops above the previous contract highs. Funds were actively rolling on the close, and not holding anything back from the June contract, which posted a triple digit gain. The funds are seeing things move more in their favor for trading the livestock markets with recent CME announcements. On March 19th, speculative limits will be expanded and is expected to attract a round of fresh buying. Today's announcement was that on June 4 the livestock markets will begin trading electronically "virtually 24 hours" a day through the business week (halting only for an hour in the afternoon). There was some cash cattle trade at $94-95 before the morning beef report. After that report, cattle owners got more optimistic and raised asking prices to $97-98. If packers meet cattle owner's asking prices like last week, then that doesn't leave April futures with much of a premium. The live cattle charts generally show outside-up days, with a strong finish which favors further buying. However, there is likely to be some interest in top picking with the new contract highs and divergence showing for Stochastics and RSI on this move higher.

Feeder cattle futures were mixed. The nearby contracts were steady/lower, pressured by the premium held relative to the feeder cattle index. Deferred contracts continue to find support from ideas that liquidation and death losses will limit supplies later this year. Feeder cattle futures didn't keep pace with live cattle, partially due to the higher grain futures.

Source: Inside Futures
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