RENEWED BULL SPREADING LIKELY ON CATTLE REPORT
Livestock analysts expect renewed bull
spreading in live cattle futures following yesterday's USDA
7-state cattle on feed report.
    The USDA reported high placements in February, which may
weigh on back months of cattle futures. Meanwhile, continued
strong marketings during the month will support the April
contract.
    Contracts for June delivery forward could open 25 to 50
cents lower while April will likely open about steady, analysts
said.
    Cheap corn is still the main incentive for putting cattle
on feed, according to Smith Barney livestock analyst Tom
O'Hare. "They have no place to send the grain," he said.
    Strong daily fundamentals may add to nearby support while
the current discount of deferred months to the cash market may
offset much of the effect of the report, analysts said.
    "The cash market is strong and may overshadow the report,"
said Robin Fuller, analyst for Agri Analysis. She added that
even though placements came in above the average trade guess,
many traders had expected high placements.
    Placements are not that negative, especially since the
technical correction in June and August live cattle futures
since last week, GH Miller analyst Jerry Gidel said.
    He said the current marketing posture will provide added
support to the nearby month. Feedlot marketings have been
running at a heavier than expected pace.
    Chuck Levitt, analyst for Shearson Lehman said that with
the number of cattle on feed down five pct at the beginning of
the year, a three pct decline in marketings was expected. But
the report for January showed marketings at 101 pct of a year
ago and in February marketings were at 100 pct, Levitt noted.
    "So far we haven't seen any decline in marketings. They
(feedlot operators) are marketing more cattle than they had
intended for the first quarter, which is a bullish
development," Levitt said.
    Gidel also noted that marketings for the early part of
March are running ahead of a year ago. Feedlots are not falling
behind and are holding that 100 pct marketing pace.
 Reuter
