Given the size of its breakdown since early January, the cattle market seems overdue for a substantial rebound. Thoughts along those lines, along with hopes for improved wholesale conditions over the next week or so probably supported live cattle futures early Wednesday morning. Those hopes were at least partially dashed when the USDA released its midday wholesale report, showing beef cutout values had slipped 0.68-0.73 cents since Tuesday evening. This raised fresh concerns about the cattle/beef outlook, which in turn undercut futures once again. February cattle slipped 0.25 cents to 125.47 cents/pound in Tuesday morning action, while April fell 0.67 cents to 129.80.
Hopes for seasonal strength seemed to support CME lean hog futures early Wednesday morning, with traders very likely hoping a big cattle rebound would pull hog and pork prices upward as well. However, a mid-morning report that Russia may step up its restrictions on American beef and pork in response to its purported concerns about the hormone ractopamine in our meat sank the Chicago market soon thereafter. Russia has emerged as a significant market for our red meat exports, so a ban on those products could hurt the domestic market. That possibility almost surely caused the subsequent futures decline. February hogs slipped just 0.25 cents to 85.45 cents/pound in reaction to the news, but June futures dove 1.20 cents to 96.07.