DTN Early Word Livestock Comments 11/29 06:06
Short Covering May Continue
The livestock complex finally was able to rally with feeder cattle leading
the charge. The oversold condition of the market triggered short covering along
with the market being overdone to the downside. Tuesday's momentum might carry
futures higher today.
DTN Contributing Analyst
Cattle: Lower Futures: Lower Live Equiv: $216.09 +$0.15*
Hogs: Lower Futures: Mixed Lean Equiv: $92.29 -$3.95**
*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.
It was a huge turnaround in cattle futures on Tuesday. Feeder cattle posted
the greatest gains with the February contract regaining $8.25 of the previous
losses. Live cattle futures showed $4.00 gains in some contracts. Traders
reacted to the oversold condition of the market and the fact that it was
overdone to the downside. The strength was not cash induced as some light
trading activity took place as some cattle sold in Texas and Kansas at $175
which is $2 lower than last week. Trading this early in the week is unusual but
packers needed to catch up on last week's lighter trade. This may set the
precedence for the week, but it is too early to tell. Boxed beef prices were
mixed yesterday with choice up $0.92 while select declined $1.45. Traders will
try to balance lower potential cash with an oversold market. However, there may
be more upside remaining as futures continue to correct.
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