Having beef packers demand all deliveries retendered against December futures for a first and second time Wednesday evening probably reflected their need for fed cattle, thereby encouraging bulls in the CME pit. Traders also seemed encouraged by news that modest numbers of Nebraska cattle had changed hands around 123 cents/pound yesterday afternoon. Unfortunately for bullish interests, they couldn’t sustain the advance through the balance of the session; the drop almost surely marked a negative reaction to the news that the U.S. will not comply with Russian demands over the use of domestic use of the growth promotant ractopamine. Nevertheless, bulls may prove very difficult to discourage this winter, since underlying fundamentals point to extreme tightness of cattle and beef supplies in early 2013. February cattle closed 0.32 cents lower to 131.47 and April fell 0.35 cents to 135.37 cents/pound.
CME lean hog futures proved able to build only marginally upon their big Wednesday advance in Thursday trading. In fact, the preceding surge may explain the comparative lack of strength being exhibited today. That is, the rise pushed the Chicago market substantially higher despite the potential for persistent cash and wholesale weakness through the holiday season. Conversely, midday reports indicated that country prices rose significantly and fresh pork belly values jumped about five cents/pound. Those developments news might easily translate into strength across the whole complex, since it suggests post-holiday demand may be emerging. On the other hand, the ham market seemingly remains vulnerable to a major seasonal drop during the days and weeks just ahead. February hogs rallied 0.25 cents to 85.90, whereas June slipped 0.02 cents to 100.02 cents/pound.