Cattle Futures - Live Cattle Rally; Funds, Cash, Spreads

US - After sagging at the start due to Chicago Board of Trade corn's sharp rise, Chicago Mercantile Exchange live cattle contracts rebounded and closed higher on fund buying and cash optimism for next week that spurred June/August bear spreading against spot-June longs conducting the Goldman Roll. The roll, which ended on Friday, is done in conjunction with the Goldman Sachs Commodity Index.
calendar icon 14 May 2007
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Meanwhile, feeder cattle finished mostly firm, lean hogs ended higher and most belly contracts settled on the plus-side of the board.

Live cattle opened contrary to higher pre-opening calls that were based on Thursday's cash cattle trade at mostly $97.50 per hundredweight on a live basis, and much-improved beef cutout's.

However, minutes before the opening bell came word that cattle, especially feeders, would suffer at the hands of CBOT corn that received bullish federal government corn-stocks data.

"This changes everything," a cattle broker said.

Back-month live cattle responded aslater anticipated based on corn's expected rally, while June briefly held modest gains because of June/August bull spreads that were driven by bullish fundamental influences.

June ultimately surrendered after CBOT feedgrains surged soon after their 1030 a.m. EDT open and feeder cattle bearishness seeped into the live cattle pit. In the process, June and August live cattle drifted below key nearby technical support levels that triggered initial fund selling and sell stops.

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