Cattle Futures - Live Cattle Soar

US - Chicago Mercantile Exchange live cattle settled up sharply on Thursday's cash cattle returns, short covering and fund buying.
calendar icon 28 December 2007
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Feeder cattle closed higher while lean hogs and pork bellies settled in negative territory.

Carryover buying nudged live cattle contracts up on the open. Also, lack of deliveries overnight, and December and February's mildly oversold Relative Strength Index situations, appealed to prospective bulls.

The board gathered momentum as spot-month traders factored in December's discount to Wednesday's cash trade.

Then came word that fed cattle Thursday sold for more than a $1 per hundredweight over Wednesday's money. The news sparked aggressive outright December buying, short covering and December/February forward spreading.

Furthermore, spot-December's rapid rise, buy stops and commercial involvement perked up nearby-February. Fund buying kicked in after February filled its recent upside chart gap and overcame moving average obstacles.

Also, a few traders followed an agriculture research firm's April live cattle buy recommendation for Dec. 27.

Friday will find traders squaring accounts as the last few trading days of the year tick down. In that respect, longs may pocket profits after recent gains, particularly after Thursday's huge rally and as December readies for expiration on Dec. 31.

And funds may step up pre-Goldman roll activity as the period for the roll draws near.

The first of five days for the Goldman roll will officially begin Jan. 8 and consists of funds shifting some of their February long positions into April. The move is tied to the Goldman Sachs Commodity Index.

Feeder cattle ended higher on short covering, live cattle's surge and sporadic Chicago Board of Trade corn softness. March's oversold chart condition, fund buying and selling January and buying March on spreads hastened advances.

December live cattle closed 247 points higher at 93.22 cents a pound, and February finished 117 points higher at 96.17 cents.

January feeders closed up 87 points at 104.37 cents a pound, and March settled 130 points higher at 106.32 cents.

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