DTN Early Word Livestock Comments 10/02 06:26
Government Shutdown Averted; Futures Likely to Bounce
The government shutdown was the topic of the day as the potential inability
to receive much needed reports put pressure on the livestock markets. Cattle
futures took away the gains and tested technical support. Hogs felt the
pressure as well, but also pressure from some of the bearish numbers in the
Hogs & Pigs report.
DTN Contributing Analyst
Cattle: Steady Futures: Higher Live Equiv: $220.52 -$0.66*
Hogs: Lower Futures: Higher Lean Equiv: $104.30 +$0.30**
*Based on formula estimating live cattle equivalent of gross packer revenue.
(The Live Cattle Equiv. 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.
The big news is the government averted a shutdown, which means business as
usual. The industry had a sigh of relief as a shutdown might have had a
significant impact on government reporting and pricing. However, now there is
another new deadline of Nov. 15 when the markets likely will see the potential
again. Cattle took a beating last week with feeder cattle seeing the most
pressure. December live cattle futures were down $3.42 for the week with
November feeder cattle down $8.62. This has done some significant chart damage,
from which it may be difficult to recover with cash steady to lower last week
and boxed beef weakness. Choice cuts were down $0.73 with select down $1.40
Friday. Reduced slaughter has moved packers into a more advantageous position
for purchasing cattle. The Commitment of Traders report showed funds increasing
their long futures positions 1,391 contracts, bringing their net-long positions
to 103,763 futures. Feeder cattle long positions were reduced by 3,383
contracts, bringing their net-long positions to 12,260 contracts.
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