Improved South American rain prospects weighed on grain futures
Cattle futures posted a surprisingly weak reaction to Wednesday morning news of cash trading 3 cents higher than benchmark levels reached last week. Still, given the persistent strength exhibited by the cattle/beef complex since late 2010, CME traders were probably prepared to push nearby futures significantly higher. We tend to blame persistent wholesale weakness for their inability to do so, especially after seeing the 1.24-cent drop suffered by choice cutout Thursday morning. The fact that fed cattle exiting feedlots outweigh their counterparts from early 2012 by over 20 pounds/head may also be playing a role in the ongoing futures weakness. Whatever the cause, a market that cannot rally on good news often proves vulnerable to larger losses, which may bode ill for the late-winter outlook. February cattle had edged 0.07 cents higher, to 128.07 cents/pound around midsession Thursday, while April rose 0.20 cents to 133.12.
Although direct market quotes from the Eastern Corn Belt indicated significant weakness Thursday morning, larger Western Corn Belt gains probably encouraged CME swine traders. Bulls may also have been reacting to talk of belated ham strength. That is, the leg muscle market had recently proven rather flat in the wake of its big holiday breakdown. However, grocers may finally have begun buying hams for planned features for Easter weekend sales, since hams were called 3 cents higher on the midday USDA pork report. A sustained seasonal advance in ham values could do a great deal to boost hog prices as well. February hogs had gained 0.77 cents to 87.87 cents/pound late Thursday morning, while June futures had risen 0.30 cents to 98.37.
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