Cattle Futures -- Locked LimitDown

Pressure on cattle futures

Uncertainty surrounding the discovery of a case of mad-cow disease in the U.S. continued to weigh on cattle Tuesday, sending futures prices lower for a fourth session.

The CME implemented an expanded price-move limit of 7.5 cents per pound exclusively for Tuesday's session, only under certain conditions, and only for the December live cattle contract.

The December contract never tested the expanded limit-down level. It closed at 77.95 cents per pound, down 4.9 cents, or 5.9 percent.

February live cattle and January feeder cattle, however, ended the session at their maximum decline levels of 5 cents.

On the CME, February live cattle fell 5 cents, or 6.2 percent, to close at 76.175 cents per pound, and January feeder cattle fell 5 cents, or 5.8 percent, to end at 80.725 cents per pound.

The market will continue to "closely monitor" both mad-cow developments out of Washington state as well as U.S. negotiations with trade partners over lifting bans on beef imports, said Rich Beaird, an analyst at Rosenthal Collins Group in Nashville.
 
By Jim Cote
Chicago, Dec. 31 (OsterDowJones) - For the first time in five straight
sessions, most-active Feb Chicago Mercantile Exchange live cattle futures did
not settle at its daily limit-down price floor, despite spending much of the
day at that level, after heavy early sales by funds abated and late buying
appeared.
In its final moments, Dec, which expired at noon CT (1800 GMT), trimmed
heavy early losses to close only 75 points lower as holders of short positions
covered, or bought back their contracts previously sold.
Traders in that month estimated only about 40 contracts remained open to
be settled by physical delivery. The reluctance of accounts with short Dec
cattle contracts to deliver the actual animals, boosted bullish hopes at the
closing bell. More distant month futures prices also reacted positively to the
Dec activity.
However, Feb still settled sharply lower as several factors weighed on
that most-active month.
In a late-morning statement, the U.S. Meat Export Federation estimated
that there are 1,800 to 2,000 containers of beef and beef products that left
U.S. shores prior to the announcement of a suspected case of BSE in the
U.S. on Dec. 23. Each container holds about 40,000 pounds of product.
"These containers of highly perishable product are being held hostage on
the high seas because our trading partners closed their borders at the moment
of the announcement," said the statement. "As a result, as estimated $200
million in beef inventories cannot be moved. U.S. companies, many of them
small and based in rural America, will suffer financial disaster - some even
ruin."
Sharply lower lean hog futures added to the nearby live cattle price
negativity. Also, price uncertainty due to the lack of widespread cash live
cattle trade kept pressure on nearby contracts.
Rumors and stories of large losses by some cattle pit traders and cattle
producers have become increasingly prevalent in conjunction with each day's
lower prices.
On the CME trading floor, Cargill and Man Financial bought Feb late in
what was characterized as short covering. Traders, however, were cautious in
terming Wednesday's price bounce off of limit-down levels a turning point in
the market.
 
Quote from Baruch:

Trade index or FX futures. These markets don't open limit-down.
More...

Heh. You can go on thinking that, but the truth is that you are not a very good student of history.
 
Does anyone have any recommendation for a broker to use to trade beef? (I wish IB did the non-electronic stuff -- it would just make it easier.)

Thx.
 
its a matter of commission not being as low as electronic
and making sure the broker or FCM is reliable and trustworthy

that prevents me from trading other products

also ... I think other ( non electronic )
products are more for swing and position
traders as opposed to daytraders scalpers
 
Quote from SethArb:

its a matter of commission not being as low as electronic
and making sure the broker or FCM is reliable and trustworthy

that prevents me from trading other products

also ... I think other ( non electronic )
products are more for swing and position
traders as opposed to daytraders scalpers
More...

Well that makes sense, and I could certainly understand if the commission structure would be different (i.e, more). Do you know of any good ones, that perhaps are not too expensive? I.e., I won't want to be paying $20 per contract.
 
Quote from Wonderduck:

Does anyone have any recommendation for a broker to use to trade beef? (I wish IB did the non-electronic stuff -- it would just make it easier.)
More...
I used NetFutures for two years, trading a variety of markets using the Leo (Refco) platform, and was very happy with their reliability, executions, commissions and customer service. I only closed my account because I decided to focus on automated trading and they didn't offer a platform with an API (which may have changed by now). If you decide to call them, ask for Steve Sweet.
 
Quote from Diode:

I used NetFutures for two years, trading a variety of markets using the Leo (Refco) platform, and was very happy with their reliability, executions, commissions and customer service. I only closed my account because I decided to focus on automated trading and they didn't offer a platform with an API (which may have changed by now). If you decide to call them, ask for Steve Sweet.
More...


Thanks much! -- Will check 'em out.
 
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