DJ CME Livestock Review: Fundamentals Pull Up Hogs; Cattle Lag

In addition, February pork bellies, which was the only contract that traded, and feeder cattle ended higher. Live cattle, however, posted a moderately lower settlement.

Lean hogs withdrew initially on profit-taking after recent futures' run-ups to multimonth highs. Market bulls were skittish about aggressively chasing pork futures higher before the Thanksgiving holiday.

Spot-December and nearby-February overbought technical indicators at first deterred prospective longs.

Meanwhile, the steady U.S. dollar, U.S. stocks' instability and Chicago Board of Trade corn's stumble discouraged far hog-month buyers.

However, front hog contracts snapped back after cash hog prices came in steady to higher and midday pork cutout values sprang to life. Supportive fundamentals quietly elevated December to a four-month high and gently nudged February to its highest level in 5 1/2 months.

Spreads were common throughout the session which included spreading into February out of December and April. Some traders also implemented April/June bull spreads.

Steady-to-firm cash hog prices are forecast for Wednesday as packers look to book supplies for Friday and Saturday. Market bulls are encouraged by current cash prices because processors normally pressure hog values a few days before holidays.

Market bulls and bears alike eagerly await the U.S. Department of Agriculture's Tuesday evening pork cutout price data after midday cutout values jumped unexpectedly.

Market participants will likely square positions on Wednesday, which is the eve of the Thanksgiving Day holiday.

CME livestock pits will observe their normal trading hours on Wednesday.

And, USDA's Iowa/Southern Minnesota weekly average hog weight item will be available early Wednesday morning.

December hogs ended up 32 points at 58.62 cents a pound, and February finished up 47 points at 66.00 cents.

February pork bellies ended 87 points higher at 86.67 cents on buy stops, lean hogs' slight advances and fresh belly's midday price hike.

Other belly months were unquoted.

CME's weekly belly storage report will be released on Tuesday after 5 p.m. EST.

Cattle Complex

Live cattle closed lower on sell stops, bear positioning and nervousness about how this week's cash cattle trade will play out.

Cattle futures succumbed initially to profit-taking. December and February set off sell stops after both months violated 10-day moving average support levels.

And uninspiring U.S. equities, the steady U.S. dollar and withered CBOT corn left speculative back-month cattle bulls flatfooted.

But it was jitters about at what price fed cattle might possibly change hands during the holiday-shortened workweek that primarily dominated market psyche.

Cash-basis cattle packer bids cropped up at $82 to $83 per hundredweight in response to $85 to $87 asking prices. Fed cattle last week sold for mostly $83.

Cattle showlists this week are believed to be larger in parts of the Plains due to last week's light-to-moderate sales. By the same token, recent boxed beef price increases and profitable beef packer margins might motivate some packers to spend more for supplies.

The federal government's midday Tuesday boxed beef quoted choice cuts up $0.13 per hundredweight, and select items rose $0.54.

The latest operating margin index for beef packers was plus $20.85 per head, compared with plus $17.25 the previous day.

And a choppy day of trading may be on tap for Wednesday as bulls and bears settle their business affairs before the holiday.

December live cattle closed 65 points lower at 83.40 cents a pound, and Feb finished down 32 points at 85.50 cents.

Feeder cattle closed firm on spot-January that was nearly inline with CME's feeder cattle index, higher cash feeder cattle prices and lower CBOT corn.

January was also technically oversold. Spreaders bought March and sold January. And, January and March also tripped buy stops after both contracts surpassed Monday's highs.

January feeder cattle ended up 35 points at 93.22 cents, and March closed up 40 points at 94.30 cents.

-By Theopolis Waters, Dow Jones Newswires; 312-559-4965; theopolis.waters@dowjones.com

(END) Dow Jones Newswires

11-24-09 1522ET

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