Grain, livestock markets could prove volatile on Monday
Thursday afternoon news of rebounding cash prices seemed to provide a major shot of confidence for cattle market bulls Friday, as indicated by the late-week CME rally. We suspect the apparent repudiation of a technical formation suggesting a major follow-through move to the downside also sparked fresh CME buying. Bulls can also take comfort from the monthly USDA Cattle on Feed report released after the Chicago close, since December placements fell short of forecasts, while late-2012 feedlot marketings easily topped expectations. Thus, cattle futures seem likely to open strongly next Monday morning. February cattle had gained 0.43 cents to 126.30 cents/pound at the Friday afternoon close, while April advanced 0.40 cents to 130.75.
Ongoing cash market gains and widespread expectations for much of the same supported lean hog futures in late-week trading. Not only was the nearby February contract trading at a discount to spot values, seasonal patterns historically imply much more of the same over the next 2-3 weeks. However, talk of surprising cash and wholesale weakness may have undercut the Chicago swine market Friday afternoon. Late reports of sizeable cash losses had to be particularly disappointing, since many sources had argued that pork packers were running short of animals for operations planned for next week. Given the larger losses suffered by the spring and summer contracts, we wonder if the Russian-ractopamine issue was resurrected. February hogs closed 0.22 cents to 86.82 cents/pound, while June futures fell 0.52 cents to 97.12.
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