CME Livestock Review: Fundamentals, Charts Take Down Hogs
CattleNetwork.com Staff03/09/2010 15:08PM
CHICAGO (Dow Jones)--Bearish market fundamentals and chart damage dragged down Chicago Mercantile Exchange hogs Tuesday.
Lean hogs vacillated at first as futures' weakness from Monday meshed with those taking profits who had been recently short the market. And while some in the pit clung to CME Globex hogs' overnight advances, those gains petered out heading into the trading floor's 10:05 a.m. EST open.
Sellers were also motivated by Monday's wholesale price setback and steady-to-lower cash hog prices Tuesday. Spot-April and actively-traded June losses mounted after both months surrendered 10-day moving average support.
Spreaders sold June and bought April that at times countered the Goldman roll.
The Goldman roll involves funds moving some of their April long positions mainly into June tied to the Standard & Poor's Goldman Sachs Commodity Index. The process began last Friday and will officially conclude on Thursday.
April hogs ended 40 points weaker, or 0.5%, at 72.40 cents a pound. June closed 97 points lower, or 1.2%, at 80.47 cents.
The U.S. Department of Agriculture's Iowa/southern Minnesota weekly average hog weight item will be released early Wednesday morning. The data is an indication of how current producers are in the region in marketing their hogs.
Lightly-traded CME pork bellies ended higher on spreading into May out of March and traders who claimed profits after being recently short futures.
Market participants await CME's weekly belly storage data that will be available Tuesday after 5 p.m. EST.
March bellies closed 50 points higher, or 0.5%, at 93.00 cents. May ended 77 points higher, or 0.8%, at 92.80 cents.
Cattle Complex
April and June CME live cattle finished up slightly on supportive fundamentals, while profit-taking leaned on remaining contracts.
Live cattle began the session mainly in bearish territory on profit-taking after futures' run up Monday. A portion of the morning's selloff was tied to April and June that were technically overbought, based on their Relative Strength Index signals.
Deep cattle months continued to soften as Chicago Board of Trade corn ticked downward. Cheap corn might motivate some cattlemen to churn out more animals that could later pressure cash cattle prices.
Front cattle months, however, sprang back, bolstered by better-than-expected midday wholesale beef values that spurred confidence about this week's cash cattle price prospects.
Packer bids for cash cattle surfaced at $90 to $91 per hundredweight against $94 to $95 offers from cattle feeders. The bulk of fed cattle a week ago brought $92.
April/June forward spreading was common, but not enough to totally disrupt the roll by fund longs out of April into June.
April ended up 20 points, or 0.2%, at 94.40 cents. June closed up 5 points, or 0.05%, at 92.32 cents. August ended down 10 points, or 0.1%, at 90.75 cents. And October closed down 12 points, or 0.2%, at 93.15 cents.
Feeder cattle at the exchange ended steady to weak on profit-taking and futures' bearish price premiums to CME's feeder cattle index. Spreaders also sold spot-March and bought April ahead of spot-month expiration on March 25.
March closed down 17 points, or 0.2%, at 102.35 cents. April ended up 2 points, or 0.02%, at 106.02 cents. May closed down 2 points, or 0.02%, at 106.60 cents.
-By Theopolis Waters, Dow Jones Newswires; 312-347-4965; theopolis.waters@dowjones.com
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