Cattle futures began their Thursday session weakly after many feedyard managers had taken lower prices for their fed animals on Wednesday. But those losses were dwarfed by the negative reaction to news that Cargill plans to close a Texas beef processing plant due to poor margins. That implies diminished packer competition for fed cattle over the short term, which in turn probably presages lower prices for those animals. Bulls might reasonably that a potential packing industry return to profitability will spur them to bid more aggressively for finished cattle at some point down the road, but that probably will not happen quickly. Big losses on the afternoon USDA wholesale beef report apparently added to the downward pressure in electronic trading Thursday night and Friday morning. February cattle seem set to begin the Friday CME pit session having fallen another 0.37 cents to 126.22 cents/pound and April will likely open 0.45 cents lower, at 130.42.
Hog futures rose substantially Thursday despite the breakdown suffered by cattle in the pit next door. Preliminary reports indicating considerable strength at the direct markets west of the Mississippi River, as well as talk of firming pork prices, seemingly supported swine values. Cash prices across the Corn Belt actually topped those expectations, whereas the wholesale market proved relatively weak. That may at least partially explain the mixed nature of price action Thursday night. February lean hog futures inched 0.07 cents higher, to 86.02 cents/pound in the early morning hours, while June gained one tick to 96.67.
Cotton futures reacted well to the latest export totals, with traders once again citing strong Chinese buying as playing a major role in the market. Bulls also argued that the latest economic data implied strong apparel demand going forward. Conversely, flat equity markets and a concurrent rise in the value of the U.S. dollar seemed to weigh upon white fiber values in Thursday night trading. Nevertheless, bullish traders appear to have considerable momentum on their side at this juncture. March cotton was trading 0.08 cents lower, at 77.70 cents/pound in pre-dawn activity, while December had declined 0.29 cents to 79.00.