Crop markets continue performing well after recent USDA reports
Live cattle futures lost considerable ground last week due to surprising cash weakness at that time. The short-term situation does not seem particularly promising at this juncture, since slow producer sales in late 2012 seemingly backed quite a few animals up into the January market. The recent lack of strength exhibited by choice grade beef values cannot be helping the situation either. However, the cattle market has consistently demonstrated great resilience over the past two years, so we would be very reluctant to rule out a sizeable technical rebound in the wake of the losses suffered over the past eight CME sessions. February cattle slipped another 0.25 cents to 130.10 cents/pound, while April fell 0.50 cents to 134.25.
Anticipation of short-term cash and/or wholesale strength may have boosted February lean hog futures Monday, especially when the general advance was viewed in light of industry talk indicating pork is benefiting from greatly elevated beef and chicken prices. Strong afternoon cash quotes seemingly confirmed the bullish bias common in the pit, but the afternoon pork report told a different tale, since cutout actually slipped moderately. That news almost surely sparked the overnight losses, thereby raising fresh questions about the short-term hog and pork outlook. February hogs slipped 0.05 cents to 85.17 in pre-dawn trading, while June futures fell 0.32 cents to 96.52 cents/pound.
Cotton futures reacted wildly to the USDA data Friday, since the numbers indicated sharp divergences in the U.S. and global cotton situations. That is, the Agriculture Department raised its estimate of 2012-13 U.S. cotton exports significantly and cut its forecasts for domestic production and ending stocks. Those numbers are clearly supportive of American prices and probably played a major role in carrying nearby futures higher Friday afternoon. However, USDA analysts also boosted their estimate of 2012-13 global carryout by over 2.0 million bales, which obviously holds negative implications for the world situation and for international prices. That probably explains the moderate losses suffered by cotton futures in Sunday night-Monday morning trading. March cotton slipped 0.18 cents to 75.42 cents/pound in early-morning activity, while December moved 0.39 cents lower at 78.65.
Cotton traders in the U.S. seem to be fighting those in the international markets in the wake of the January 11 USDA reports. The Agriculture Department raised its estimate of 2012-13 U.S. cotton exports significantly and cut its forecasts for domestic production and ending stocks, which seems quite supportive of the short-term U.S. outlook. However, USDA analysts also boosted their estimate of 2012-13 global carryout by over 2.0 million bales, most of which will apparently go to China. Indeed, talk of a widely anticipated sale of a small portion of that stockpile reportedly pulled New York futures downward Monday afternoon. However, bulls reasserted themselves overnight, as exemplified by the 0.45-cent March futures surge to 75.97 cents/pound; December rose 0.16 cents to 79.30 in early trading.