The surprising weakness exhibited by choice grade beef cutout Monday likely played a significant role in undercutting CME live cattle futures. But traders may also have harbored concerns about the size of feedlot showlists during the days just ahead, since producers reportedly sold few animals last week. Those fears were at least partially confirmed this morning, when a Panhandle feedlot reportedly sold a sizeable lot for 128 cents/pound, which essentially matched the consensus Southern Plains price posted last Friday. Optimism about the first quarter outlook probably provided persistent support, especially after choice beef values rebounded at noon. Still, Tuesday CME action was not very encouraging. February cattle ended the day having slipped 0.45 cents to 132.55 cents/pound, while April slumped 0.40 to 136.32.
Many in the livestock industry probably believe greatly elevated cattle and beef prices will support the hog and pork complex for the foreseeable future. Thus, the traditional mid-winter swine rally might be exaggerated if/when fed cattle prices surge to fresh record highs. That may at least partially explain the gains posted by the nearby CME hog contracts Tuesday. Conversely, one has to wonder if deferred hog futures are falling prey to suspicions that the surprisingly large numbers stated on the late December USDA Hogs & Pigs report bode ill for the summer-fall price outlook. The mixed trading experienced today becomes more understandable in such circumstances. February hogs rose 0.05 cents to 86.35 cents/pound Tuesday, while the June contract posted a 0.35-cent advance to 98.50.