Hog markets led cattle lower on Friday

Grain futures remained surprisingly stable Friday. Strong employment data and mixed economic numbers boosted stocks and sent the U.S. dollar soaring Friday morning. The fact that corn and wheat futures remained firm in the face of those moves was impressive. Bulls are crediting the storm system slowing the corn harvest and short covering. December corn futures ended the week 0.5 cent higher at $3.2325/bushel, while May added 0.75 to $3.45.

Talk of huge yields seemed to depress the soy complex. Although the soybean harvest is also facing short-term delays, CBOT traders seemed to ignore its supportive effects. That probably reflected fresh industry talk of massive Corn Belt yields and the implied increase in domestic production. Traders may also have focused on the U.S. dollar surge and its negative implications for commodity values. November soybean futures fell 12.25 cents to $9.1225/bushel at their Friday close, while December soyoil sank 0.38 cents to 32.42 cents/pound, and December soymeal sagged $2.5 to $298.8/ton.

Short-covering probably supported the wheat markets. Continued talk of Russia’s recent lack of grain sales, along with the strong result on Thursday’s weekly USDA Export Sales report encouraged bulls in wheat futures Friday. Active covering of huge short fund positions also appeared to support prices despite the U.S. dollar surge. December CBOT wheat rose 3.0 cents to $4.8575/bushel in late Friday trading, while December KC wheat advanced 6.5 cents to $5.68/bushel, and December MWE wheat climbed 8.0 to $5.435.

Cattle futures proved surprisingly weak Friday. Talk of a fresh rise in cash cattle prices supported CME futures through midweek, but the Chicago market posted a surprising reversal Friday morning. Wire service reports cited bullish profit-taking, but packer stubbornness may have given bulls second thoughts. December live cattle futures dropped 0.55 cents to 165.87 cents/pound late Friday afternoon, while April futures edged up 0.05 to 164.30. Meanwhile, November feeder futures jumped 0.90 cents to 240.97 cents/pound and January feeders vaulted 0.85 to 234.72.

A drop in the CME index seemingly triggered Friday’s hog reversal. Ideas that the cash hog values would continue rising during the days just ahead seemed to support swine futures this week. However, the industry apparently got wind of a likely drop in the official quote when it’s reported Monday, thereby sparking accelerated selling. December hogs plunged 1.90 cents to 93.02 cents/pound at Friday’s settlement, while April fell 0.50 to 91.30.