The cattle market almost surely disappointed bullish interests early this week, with the drop in cash prices and the February futures drop below the pivotal 130-cent levels being especially discouraging. Still, Chicago prices seemed set to stabilize Thursday morning, possibly due to trader ideas that the breakdown had largely run its course. Unfortunately for those bulls, the ongoing downtrend was greatly exacerbated by 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. Bulls might reasonably that a potential packing industry return to profitability will spur them to big more aggressively for finished cattle at that time; that probably will not happen quickly. February cattle plunged 1.65 cents to 126.60 cents/pound Thursday, while April tumbled 1.57 cents to 130.87.
Hog futures offered a significant contrast to the weakness in the cattle pit Thursday morning. And while the cash hog and wholesale pork markets have not advanced all that substantially lately, they have certainly proven firmer than their cattle/beef counterparts. Morning reports indicated considerable strength at the direct markets west of the Mississippi River, while the mid-morning USDA report implied wholesale prices were firming. Whether the market can sustain its strength in the face of dropping cattle prices is very much open to question, particularly after the Cargill announcement of a plant closing. February hogs ended the Thursday CME session having risen 0.75 cents to 85.95 cents/pound, while June futures settled unchanged at 96.65.