Pressure continues on corn prices Friday morning
After seeming to break out to the upside Wednesday, live cattle futures suffered a rather stark reversal yesterday. Reports of wholesale weakness, particularly in choice cutout probably played a role in the drop, as did reports of light country trading at 126 cents/pound (down about one cent from last week), but the main driver of the decline may simply have been broad profit taking by bulls in the wake of recent gains. Futures and hedge funds were reportedly exiting large numbers of positions ahead of the year-end holiday season. The short-covering that apparently boosted the crop markets overnight may also boost livestock futures today, but prices were actually lower in early-morning trading. February live cattle futures slipped 0.20 cents to 133.30 cents/pound, while the April contract had dipped 0.27 cents to 137.12.
Hog futures held up better than many of its commodity counterparts Thursday, which probably reflects the bullish impact of the winter storm that swept across the Central Plains, as well as firmness on the midday pork report. However, cash market slippage and a large ham-led breakdown in wholesale prices Thursday afternoon set the stage for fresh Chicago weakness today. Still, the swine market might also sustain a rebound today if the markets are dominated by short covering. February hogs ticked 0.12 cents lower to 86.32 cents/pound in early morning trading, as did its June counterpart at 100.22.
The Thursday Export Sales report once again held bullish connotations for the cotton market, since exports continue running significantly ahead of the five-year average. Unfortunately for bullish interests, the concurrent breakdown in the grain and soy complex dragged the white fiber market downward as well. Furthermore, big losses in the metal and livestock complexes suggested futures funds were actively exiting positions before the holiday season, which ultimately created a general rout across the commodity markets. Conversely, short-covering seems likely to prove rather pervasive today, thereby potentially lending cotton futures considerable support. The fact that the nearby March contract has remained above its 10-day moving average during the recent slide suggests prices could surge in more supportive conditions. March cotton was unchanged at 75.83 in overnight trading, while December inched 2 ticks higher to 78.25 cents/pound.