As expected, CME lean hog futures reacted badly to the quarterly USDA Hogs & Pigs report, since most of the stated numbers modestly exceeded forecasts. The most negative numbers seemed to apply for the summer 2013 outlook, which explains the relatively large losses suffered by those contracts. However, the swine market may come back strongly today, since the Monday afternoon pork report indicated a sizeable increase. Moreover, the passage of the fiscal cliff deal seems likely to give the whole commodity complex a boost. February hogs edged 0.65 cents lower to 85.72 cents/pound on December 31, while the June contract dove 1.75 cents to 97.85.
Cotton futures may also have benefited from short-covering Monday, while some traders may have been making bullish bets based upon recent Chinese purchases. Bulls may also believe cotton prices will have to rise significantly in order to compete with soybeans for acreage across the Southeastern U.S. As is expected of many commodity markets this morning, cotton futures surged in response to the fiscal cliff deal in early trading. March cotton jumped 0.81 cents to 75.95, while December climbed 0.26 to 79.00 cents/pound.