Dry weather concerns sent the ag markets soaring overnight
After benefiting greatly from strength spilling over from the cattle and beef complex in recent months, the hog market seems to be suffering from diminished support these days. For example, the nearby February hog contract has actually been trending downward since mid-November. Bulls were hoping its discount to the CME index would pull it upward as it approached expiration, but recent cash losses appear to be pulling the benchmark cash quote downward. Optimists also have to be disappointed with overnight market action as well, since Tuesday afternoon wholesale report indicated that a big jump in pork loin values had boosted cutout substantially. The subsequent Chicago losses seemingly imply considerable underlying weakness. February hogs had slipped 0.22 cents to 86.87 cents/pound in pre-dawn trading, whereas June futures edged 0.07 cents higher to 98.25.
Cotton futures surged upward again Tuesday despite a general lack of pertinent news. Traders downplayed talk of tight deliverable supplies against the main Chinese futures exchange, calling the market contrived. Wire service reports gave a great deal more credence to a so-called golden cross formed Tuesday, when the 50-day moving average (MA) for March futures pushed above its 200-day MA. We should point out that the early surge and subsequent decline seemed to form a tweezer top on its daily candlestick chart, which might presage a short-term test of underlying chart support. Bulls seemed undeterred in overnight trading. March cotton rallied 0.28 cents to 82.67 cents/pound in the early morning hours, but its December counterpart slipped 0.23 cents to 80.95.