Choice grade beef values continued their recent slump Tuesday, which probably weighed upon CME live cattle futures as well. As pointed out previously, the cattle/beef industry has long been anticipating a sizeable first quarter price advance, due largely to a looming seasonal shortage of fed cattle exiting feedlots. However, beef demand is seemingly suffering at current elevated prices, thereby appearing to leave both cash and wholesale prices bumping up against past highs. The bulls inability to spark a technical reversal yesterday did not improve their situation. February cattle seem set to begin their Wednesday pit session 0.42 cents lower, at 130.00 cents/pound and April had dipped 0.32 cents to 134.10 in early trading.
Lean hog futures have recently benefited from ideas that greatly elevated beef and chicken costs would cause a shift toward more moderately priced pork. When combined with the traditional market strength often experienced during January and early February, the hog market seemed set to post a substantial advance. And while swine values have certainly outperformed their counterparts in the cattle pit lately, they have not lived up to bullish expectations either. Mixed cash quotes and a very modest rise in pork cutout Tuesday afternoon seemed to exemplify recent market action. Thus, it was not terribly surprising to see futures post a mixed to lower performance overnight. February hogs slipped 0.12 cents to 85.12 cents/pound in early morning action, while the June future edged 0.05 cents higher to 96.65.
The cotton industry is seemingly quite confident that the global situation will remain relatively tight despite the huge stockpile now held by the Chinese government. That optimism was apparently confirmed Tuesday, when Chinese mills reportedly turned up their noses at cotton being auctioned by government officials. Prices continued rising overnight, possibly due to a report that spot Indian supplies are likely to fall about 6% short of year-ago levels. Having the March ICE contract push above its 200-day MA Tuesday is probably attracting technical buying as well. March cotton had risen 0.38 cents to 76.59 cents/pound in Wednesday morning trading, while December dipped 0.17 cents to 78.90.