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Open Interest Drops For Live Cattle



Pork packers improved their margin nicely yesterday with cash lower and cutout higher and reaching a new high for the current move. Butts have developed some weakness this week but otherwise I don’t see any cracks in the armor. Technically, Oct hogs expired on their highs and now Dec will pick up where Oct left off. However, Dec hogs are $10 under the Oct. We may witness a very quick $8 to $10 move upward in Dec futures. Open interest was up over 2,400 cars which is bullish. Weekly export data will not be released until tomorrow due to the holiday on Monday.  


While open interest is rising in hog futures as prices rise, open interest is dropping like a stone in live cattle futures and the charts are rolling over…bearish. Total open interest from yesterday was down 1,600 cars and stands at 273,226. Record high OI in live cattle, from earlier this year, stands at 400,453. This “trend” is expected to continue pressing and depressing live cattle futures lower. Cash trade was established everywhere yesterday at 108 and at $169. It appears the $1.09 trade that occurred Monday in TX is the high for the week and possibly, quite possibly the high for a while. Jan FC closed into a new recent low yesterday. Most active Dec LC has settled below key moving averages in two out of the last three sessions. A close below 11000 will be the nail in the coffin. We like establishing bearish option positions for both spec and hedge player.

For a free 30-day trial to the evening livestock wire which includes a morning livestock report and midday pork and beef update, call 312-242-7905 or send an email to: dennis.smith@archerfinancials.com 

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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