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DTN Early Word Livestock Comments 09/21 06:17
Cattle Futures Should Rebound Monday
Cattle futures were mixed as traders positioned themselves ahead of the
Cattle on Feed report. The report showed lower marketing and placements. Hogs
remained unable to find a bottom as new contract lows unfolded again.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Higher Live Equiv: $273.50 +$0.14*
Hogs: Higher Futures: Higher Lean Equiv: $94.01 -$0.56**
*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:
Cattle futures lost ground during the second half of the week as boxed beef
prices struggled and traders positioned ahead of the Cattle on Feed report. The
report was released and is considered neutral to bullish. Cattle on feed were
at 101% of a year ago. Bear in mind that many of these cattle are at heavier
weights than a year ago. Placements were bullish, as they were 91% of a year
ago and well under the trade estimate of 96.7%. Marketings were 97% of a year
ago and slightly above the estimate of 96.1%. There is some indication that the
report is mostly neutral, as the trend of higher weights and lower marketing
will offset the lower placement number. Some of that will be true, but on feed
and marketed numbers were very near the trade estimates. However, placements
were substantially below the trade estimates, which is likely to result in
higher trade. Cash cattle trade last week was generally steady and should be
considered a victory. Boxed beef prices were mixed, with choice down $0.21 and
select up $1.38. The Commitment of Traders report showed the funds as net
sellers of 1,209 live cattle futures contracts, reducing their long position to
47,696. Feeder cattle showed they were net sellers of 237 contracts, reducing
their long positions to 7,211.
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