Despite widespread expectations for a substantial seasonal rally through January and early February, both cash hog and wholesale pork values suffered moderate losses Tuesday. Losses at the direct markets west of the Mississippi River were particularly noteworthy, as was the general decline suffered by most pork cuts. The ham market was the lone gainer Tuesday. Given the bullish environment and the premiums already built into CME futures, it was not terribly surprising to see futures drop significantly in Tuesday night trading. February hogs seem set to begin the Chicago pit session 0.62 cents lower at 85.72 cents/pound, while the June contract is down 0.85 cents to 98.05.
The chief cotton analyst for global trader Louis Dreyfus publicly lamented the ongoing Chinese buying program overnight and blamed it for distorting the international cotton market. He claimed their buying spree was greatly encouraging Chinese production while causing its domestic millers to switch to cheaper synthetic fibers. And while the situation is unlikely to change in the near future, it raises the real possibility of overhanging Chinese inventories for some time. Cotton prices could be capped in such an environment. Nevertheless, ICE futures rose moderately in Wednesday morning activity. March cotton futures climbed 0.10 cents to 75.22 cents/pound, while December advanced 0.37 cents to 79.00.