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DJ CME Livestock Review: Pork Complex Rallies; Cattle Also Gain83 days ago
KANSAS CITY (Dow Jones)--Chicago Mercantile Exchange pit-traded lean hog futures closed mostly higher after rallying on a turnaround in the pork price outlook and aided by tripped buy stops late in the session.
In other markets, pork bellies followed hogs up, while live cattle and feeders also closed higher.
Lean hogs dipped on the open and remained mostly lower through the first two hours. Buying interest increased near midday after the U.S. Department of Agriculture's pork wire showed firmer indications for butts and trimmings. Brokers and analysts said many traders held bearish views for pork prices entering the week. Pork values, especially for the retail cuts such as loins and butts, are typically weak ahead of the U.S. Thanksgiving holiday. A higher quote Monday afternoon and firmer indications in Tuesday's midday report, however, contributed to short covering and some new buying interest.
December hogs matched last week's high and closed up 145 points at 56.40 cents, its highest level since Nov. 5. February hogs posted a 1 1/2-week high and closed 162 higher at 63.97 cents.
In Globex trading, the December/February spread occurred 5,549 times from $7.12 to $7.75, premium February. The December/April spread was done 175 times from $11.55 to $12.10, according to the CME.
Bellies were higher on spill-over support from hogs. February bellies closed 120 points higher at 88.60 cents.
Pit-traded CME live cattle and feeder cattle futures prices Tuesday ended higher, pushed by continued commodity fund-style buying of many commodities.
Brokers and analysts said the higher U.S. dollar kicked off the fund-style buying. The dollar gained strength overnight and managed to hold during the day.
The higher futures prices flew in the face of bearish sentiment permeating the cash market, which traders reported earlier in the day. Many traders thought the funds needed to cover their pre-sold positions badly.
For much of the session, pit-traded CME live cattle futures were narrowly mixed, caught between technical support and weaker cash-market ideas for the week, analysts said. The strong fund-style buying didn't show up until later.
Cattle markets resisted the urge to move higher until late because of widespread fears of lower cash prices this week and ideas that Friday's U.S. Department of Agriculture cattle-on-feed report could be construed as bearish. Aggregate estimates of the USDA report are due Wednesday.
Feeder cattle also gained on the fund-style buying, although corn prices ended nearly unchanged. Corn values were lower for most of the session, however, lending more fundamental support to the feeder cattle.
Corn's lack of significant pressure through most of the session from the higher U.S. dollar was interpreted by some traders as underlying support in corn, which capped gains in feeder cattle until late.
December live cattle ended 50 points higher at 84.07 cents a pound, while February settled 52 points higher at 85.65 cents. November feeder cattle closed 5 points higher at 93.15 cents, and January ended 40 higher at 92.77.
-By Curt Thacker and Lester Aldrich; Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com
(END) Dow Jones Newswires
November 17, 2009 15:37 ET (20:37 GMT)
Cattle Complex
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