Crop markets mixed, livestock prices fell sharply on Wednesday
CME live cattle traders seemed had to adjust to a less promising environment Wednesday, since fed cattle traded lightly at steady prices Tuesday and again around midsession. Given the habit of producers and packers to wait until Friday to get something done during most weeks, the early-week activity was quite surprising. Wednesday morning wholesale trading was not encouraging either, since choice cutout slipped once again. Bulls have almost surely been relying upon sustained wholesale strength to power the whole complex higher through winter and early spring, so hints that that might not be the case could undermine premium live cattle futures. February cattle ended the day having tumbled 1.00 cent to 131.55 cents/pound, while April dropped 0.95 cents to 135.40.
Despite widespread expectations for a substantial seasonal rally through January and early February, both cash hog and wholesale pork values suffered moderate losses Tuesday. The cash weakness reportedly continued Wednesday morning, thereby exacerbating the surprisingly negative short-term situation. As in the cattle/beef complex, swine traders are very likely anticipating a substantial seasonal rise in wholesale prices, so late news of a sizeable losses in pork cutout may have had an inordinate impact upon CME futures. The failure of bullish efforts to support nearby values above their short-to-intermediate-term moving averages may have sparked active technical selling as well. February hogs had plunged 2.15 cents to 84.20 cents/pound by the time the pit session ended, while June futures had plummeted 2.70 cents to 96.20.
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