Cattle futures bounced from their weak Wednesday close in overnight trading. That was rather surprising given trader disappointment with the decline suffered by choice beef cutout, since they were almost surely hoping for a sustained upward surge in wholesale values, which in turn might have powered country cattle prices higher. The market probably reacted to the delivery situation in early-Thursday trading. That is, all the delivery notices retendered for the first and second times were demanded Wednesday afternoon, thereby indicating that packers are still ready, willing and able to take cattle if the price is right. The market may continue rising in anticipation of a cash market bounce later today or Friday. February cattle futures climbed 0.32 cents to 132.12, while the April contract advanced 0.25 to 136.00 cents/pound in overnight action.
Despite a dearth of supportive fundamental news Wednesday, CME lean hog futures bounced strongly from recent losses. Traders reportedly expect a traditional improvement in demand and slowing supplies in early 2013 to push the whole hog and pork complex higher. Fund buying reportedly exaggerated the advance. However, bulls have to keep the potential for considerable short-term weakness in mind, since the anticipated first-quarter rally might be forced to start from substantially lower levels if conditions worsen during the waning days of 2012. The sizeable drop in pork cutout values Wednesday afternoon may have exacerbated such concerns. Still, February hogs rose 0.15 cents to 85.80; June slipped 0.05 cents to 100.00 cents/pound in overnight electronic trading.
Cotton futures appeared to be following through upon their bullish reaction to the WASDE report in midweek trading. The USDA’s suggestion that China will purchase the bulk of its 2012 crop for its national reserve, thereby reducing supplies available to its domestic mills, added to the bullish atmosphere. In contrast to the weakness experienced by the grain markets lately, the recent cotton advance may have put prices in overbought territory. Those considerations, as well as overnight weakness in the grain, metal and energy complexes may have exaggerated the slippage suffered overnight. March cotton fell 0.37 cents, to 74.75 cents/pound and the December 2013 contract dipped 0.32 to 77.90 cents/pound.