Cattle Futures - Cattle Complex Tumbles

US - CME live cattle settled lower on fund liquidation, last Friday's cash outcome and negative outside market factors.
calendar icon 18 March 2008
clock icon 2 minute read

Beef futures chopped around in early action as traders adjusted spot-April cattle positions based on last week's fed cattle prices that came in steady to down $0.50 compared with the week before. Meanwhile, bull spreads and April and June's oversold chart signals provided short-lived underlying front-month backing.

Eventually, spot-April ticked down after the contract slipped beneath 10-day moving average support and as traders set their sights on this week's potential cash sales. Also, June sell stops kicked in after the nearby-month option fell below Friday's 90.55-cent low before sliding to a Feb. 20 bottom.

The U.S. Department of Agriculture's Monday midday boxed beef wire showed choice cuts up $0.50 per hundredweight and select items rose $0.21.

Spot-April and nearby-June were technically oversold before Monday's open and even more so after the day's settlement, a broker said. However, he said, any chance of a market turnaround will be inhibited by cash uncertainty and caution before Thursday's USDA cattle-on-feed report.

Financial, equities and CBOT corn markets exerted bearish influence on live cattle futures Monday, so it will be interesting to see if any or all of those markets can make a comeback on Tuesday, a live cattle trader said.

Despite CBOT corn's limit-down move, feeder cattle ended lower on March selling before the spot-month expires on March 20, live cattle losses and spreaders who sold May and bought March. Technical weight and several contracts premiums' to the CME feeder cattle index contributed to hefty feeder losses.

April live cattle closed 127 points lower at 89.22 cents a pound, and June ended 97 points lower at 89.97 cents.

March feeders closed down 20 points at 99.10 cents, and April ended 80 points lower at 101.70 cents.


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