CME Livestock Outlook: Weaker Hogs, Cattle Sentiments

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

CHICAGO (Dow Jones)--Uncertainty surrounding conflicting market fundamentals could lean on Chicago Mercantile Exchange hogs after Tuesday's open.

Monday's $0.40 per hundredweight wholesale pork price bounce that improved pork packer margins is a market plus. But more cash hog price pressure is anticipated Tuesday as processors continue to reduce slaughter rates as a way of countering tight supplies.

Nonetheless, June and July are underpriced based on CME's lean hog index which might generate buying into potential front-month breaks.

And spot-May hog's movement will be dictated by ideas about where the contract will settle after it expires on May 14.

Tuesday is the third of five days for the current Goldman roll period. The move, which is tied to the Standard & Poor's Goldman Sachs Commodity index, consists of funds moving some of their June long positions into July and August.

CME hog traders will again keep tabs on the stock market that pulled back early Tuesday, which some attributed to profit-taking after Monday's huge advances.

Public perceptions that the country's financial structure is unstable might prompt consumers to forego high-end pork cuts for less-costly meat proteins.

Charts show June above 85.56-cent 20-day and 85.33 10-day moving average support levels.

July is over 85.79 20-day and 85.60 10-day moving average areas of support.

A mixed CME pork belly open is seen as participants adjust positions before the exchange's weekly belly storage data at 5 p.m. EDT Tuesday.

No belly deliveries were posted by CME Monday against the May contract that will expire on May 25.

Cattle Complex

Profit-taking and confusion about how to trade front-month CME live cattle with the Goldman roll in play are seen weighing on futures at the start.

In the live cattle pit, the Goldman roll involves the shift by funds out of spot-June into the nearby-August contract.

Some cash-basis cattle Monday sold for $100 per hundredweight with bids from packers still at that level. Other cattle sellers are asking $101 to $102 for supplies. The bulk of fed cattle last week brought mainly $99 to $100.

Speculative buyers are attracted to June and July live cattle because of their bullish price discounts to recent cash sales. However, those betting against live cattle advances assert that front months are fairly priced due to the seasonal tendency for cattle numbers to increase this time of year.

Until more cash cattle news surfaces, live cattle traders will monitor equities' stumble and the dollar's snapback which could have negative implications for the domestic beef sector.

Stock market jitters threaten consumer confidence in the economy which may harm the sale of expensive beef cuts. And, the stronger dollar tends to constrict U.S. exports -- including beef.

A flat-to-lower CME feeder cattle start is likely on profit-taking and possible selling in the exchange's live cattle pit.

May's 111.94-cents 40-day moving average serves as an area of chart support. The contract's 112.94 20-day and 112.98 10-day moving averages are resistance obstacles.

August is between its 115.78 20-day moving average support and 115.96 10-day moving average resistance levels.

(To access the daily livestock market data recap report, keyword search for "Livestock Market Fundamental Data Recap.")


-By Theopolis Waters, Dow Jones Newswires; 312-347-4965; theopolis.waters@dowjones.com




Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Farmall® C

From the feedlot to the pasture, the Case IH Farmall® C series tractors help you do more. Available in a range ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight