Cattle Futures Affected by Immigration Raid
Wednesday, December 13, 2006
by Donna Heidkamp of RJO Futures
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The cattle futures markets had a mixed reaction yesterday as a
result of the immigration raid at 4 beef packing plants and 2 hog
packing plants owned by Swift. The raid is reportedly the result of
an ongoing investigation involving a large identity theft ring.
According to the rumor mill, approximately 11 bus loads of
employees were detained. A news conference is scheduled for later
today in Washington to discuss the raid in more detail. The raided
plants were forced to halt operations as a result of lack of
employees. The near term effect should be bullish for boxed beef
and bearish for feeders and slaughter ready cattle due to supply
backlogs. The long term effects are still being weighed out. In my
opinion, this could add to the momentum of the bearish trend with
the higher corn prices and longer slaughter turn around which could
also effect the quality of the beef and pork hitting the
supermarket shelves.
Amongst other factors effecting the long term picture in the
cattle market includes our export sales progress. According to the
CME Daily Livestock Report written by Steve Meyer and Len Steiner,
the US is gaining ground on increasing beef exports globally.
However, we are still a long ways from catching up to the pre-BSE
export levels. Beef exports are up 67% over last year. Shipments to
Japan were 8.6% of total US exports last month and 2.3% of the
total exports for the year. It is unlikely to see exports above 10%
to Japan any time soon as a result of current shipping rules to
Japan.
Technically, the January feeder cattle and February live cattle
markets are both at critical technical levels. A weaker close today
could trigger additional selling pressure near term.
January Feeder Cattle--Support: 9865; Resistance: 10067
February Live Cattle--Support: 8810; Resistance: 8895; 8975
Chart copyright 2006 CQG, Inc.
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About the author
My interest in the futures industry stems from strong family ties to production agriculture in Hereford, Texas. After completing a bachelor's degree in Agricultural Economics at Texas Tech University in 1995, I moved to Chicago to participate in the Chicago Mercantile Exchange Agricultural Broker Training Program. The program exposed me to all facets of the futures industry, enabling me to work with experienced floor traders and develop a strong understanding of the intricacies of trading in the futures markets.
Since completing the training program in 1995, I have continued to gain a well-rounded knowledge of the industry by working as an order clerk, trading desk manager, and broker for RJO Futures. In 2004, I started a branch office of RJO Futures to focus my efforts on helping clients meet their trading goals. By identifying client objectives, managing risk, and providing a carefully tailored service, I serve as a dedicated liaison on all trading floors to full-service, broker assist, and on-line clients. My commentary can also be heard regularly on CNBC TV and Bloomberg.
In order to continue to better serve my customers in an ever-evolving and dynamic industry, I also completed a M.S. degree in Financial Markets and Trading from the Illinois Institute of Technology in May of 1999.
RJO Futures is the retail division of R.J. O'Brien, one of the oldest FCMs tracing its history back to 1914.
To learn more about RJO Futures, visit rjofutures.com
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