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DTN Early Word Livestock Comments 10/28 06:28
Cattle Expected To Open Lower Monday
Cattle traders were cautious Friday ahead of the Cattle on Feed report, and
rightly so, as the numbers came in higher than the analyst's estimates. The
report may put initial pressure on the market Monday. Hog futures were able to
close higher with most of the buying interest in the December contract.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Lower Live Equiv: $232.98 +$0.70*
Hogs: Higher Futures: Mixed Lean Equiv: $104.83 +$0.79**
*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:
Traders were uncertain of the numbers the Cattle on Feed report would show,
resulting in mixed trade to end Friday. The report came in slightly bearish
with on-feed numbers as of Oct. 1 at 100% compared to the estimate of 99.7%.
Placements in September were at 98% of last year compared to the estimate of
95.6%. Marketings were 102% compared to the estimate of 102.2%. The higher
placement number was not unexpected as the dry conditions were thought to have
moved more cattle to feedlots. Nevertheless, the trade usually reacts to which
side of the estimates the actual numbers fall. The report may result in
pressure on the market at the open Monday but traders will then focus back on
the fundamentals, tighter cattle supply, and strong beef demand. Boxed beef
prices Friday closed higher with choice up $1.07 and select up $0.74. The
Commitments of Traders report showed managed money traders adding 4,524 long
futures positions in live cattle, bringing their net-long position to 92,825
contracts. They added 618 long positions to feeder cattle, bringing the next
long position to 8,275 contracts.
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