Grain, livestock markets wide-ranging moves on Thursday
The cattle situation appeared quite weak Thursday morning, since Russian threats to restrict its red meat imports, sliding cash and wholesale values and the seemingly negative implications of pre-report surveys published ahead of the Friday Afternoon USDA Cattle on Feed report were weighing upon the market. Thus, nearby futures ended the Chicago session only slightly higher. However, the persistent futures firmness in the face of the various threats apparently persuaded beef packers to pay up for fed cattle across the Great Plains. The early-afternoon news then sent cattle futures decisively higher in early-afternoon electronic trading, thereby appearing to put an end to the recent threat of a major follow-through move to the downside. We suspect the Friday CME session will be marked by more of the same as traders prepare for the afternoon Cattle on Feed report. February cattle ended the open outcry session having risen just 0.10 cents to 125.87 cents/pound, while April closed 0.10 cents lower at 130.35.
Hopes for seasonal strength seemed to support CME lean hog futures again Thursday, with traders very likely focusing upon cash market strength at this juncture. That is, surging country prices have actually pushed the CME lean hog index to a premium over nearby futures. For example, the exchange-calculated cash equivalent is expected to reach 87.78 cents/pound Friday morning, while the February future ended the day at 87.05. Moreover, the hog/pork complex has a history of rising seasonally into mid-February, so traders are probably justified in thinking the nearby contract enjoys significant upside potential. As pointed out above, February hogs closed 1.07 cents higher at 87.05 cents/pound Thursday afternoon, while June futures climbed 0.80 cents to 97.40.
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