Soybean markets dive on Wednesday
After proving surprisingly weak Tuesday, possibly due to the sizeable drop posted by choice beef values, nearby live cattle futures underwent a fresh resurgence Wednesday morning. That buying probably marked the industry response to wire service surveys published ahead of the Friday afternoon (12/21) USDA Cattle on Feed report, which is expected to state November feedlot placements approximately 9% below the comparable 2011 rate. Forecasts for the December 1 U.S. feedlot population, at just 93.4% of last year, also imply a 10-year low for that figure. These forecasts reemphasize the growing tightness of the domestic fed cattle supply. Conversely, having choice beef prices continually prove unable to mount a serious challenge of the $2.00/pound level raises persistent questions about the strength of beef demand at current levels. Still, recent events certainly seem to favor bullish interests. February live cattle futures jumped 1.30 cents to 134.25 cents/pound and April added 0.85 cents to 137.97.
News of cash hog strength and spillover support from the cattle market seemed to boost CME swine values Wednesday. One also has to wonder if news that Canadian packers will honor Russia’s request to monitor their product for the growth promotant ractopamine supported prices as well. That might be seen as a negative for the U.S. market, since domestic sources have not agreed to Russia’s terms, but reduced ractopamine use would probably reduce North American pork production. Bulls may also be thinking the snowstorm looming over Iowa and surrounding areas will disrupt transportation and at least partially support prices over the short run. February hogs surged 1.30 cents to 86.55 cents/pound this morning, while those anticipating the usual summer peak pushed June futures 0.60 cents higher to 100.60.
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