Cattle Futures - Cattle Complex Rallies On Cash, Corn

US - After loitering in negative territory for most of the session, Chicago Mercantile Exchange live and feeder cattle markets ended on a positive note on Thursday's cash cattle strength, boxed beef's continued gains and short covering. Lower Chicago Board of Trade corn furthered cattle's advances.
calendar icon 11 May 2007
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Soon after a mixed open, live cattle unraveled when June and August failed to cross technical resistance thresholds. Commercials began the sell-off and funds quickly joined in, which triggered sell stops along the way.

However, confident in fundamental indicators, market bulls protected positions by buying breaks. Front-month liquidation subsided after the U.S. Department of Agriculture's midday boxed beef wire quoted choice and select up $0.46 and $1.46.

What's more, live cattle futures floated upward on word of $97.50 per hundredweight live-basis cash cattle sales in Kansas and Texas. The news also set June/August bull-spreading in motion against spotty Goldman Roll activity. The roll, which will finish on Friday, refers to June longs shifting into August, tied to the Goldman Sachs Commodity Index.

Front-month futures remain at a distinct discount to Thursday cash trade, which might underpin the June and August contracts on Friday.

On the other hand, Friday is the last official day of the Goldman Roll, which might outmuscle June/August bear spreaders. Cattle traders will monitor CBOT corn's overnight trade because of inconsistent feedgrain activity this week. And cattle market bulls and bears alike expect to square positions before the weekend, which could stir market volatility.

RJ O'Brien was on both sides of June. Rosenthal sold June and August. Fimat bought August.

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