Seasonal cash market strength seemed to support CME lean hog futures again Thursday, with bullish traders rather obviously hoping for much more of the same during the days and weeks just ahead. Hog supplies are in the process of dwindling from annual highs in late fall to lows routinely experienced in early summer each year. Conversely, while ham demand has plunged from pre-holiday levels, interest in the other cuts usually grows substantially as the spring grilling season approaches. Those account for the fact that most CME swine futures are trading at sizeable premiums over current spot values. That fact that the nearby February future is trading at a modest discount seems likely to offer considerable support over the short term. Nevertheless, futures slipped Thursday night, possibly due to modest increases in Western Corn Belt prices Thursday and/or the slippage seen at the wholesale level. February hogs slipped 0.17 cents to 86.87 cents/pound early Friday morning, while June futures lost 0.10 cents to 97.50.
March cotton futures jumped to its highest level since last May Thursday and touched the 84.00-cent level before suffering a sizeable setback in the afternoon. Bulls seemingly continue relying strong buying and limited resales by Chinese government officials over the short-to-intermediate term, but we would also warn that a substantial portion of the Thursday spike was probably driven by short-covering. The market was extremely overbought at the daily high and remains well into overbought territory at this juncture. Thus, the overnight decline was not particularly surprising. We suspect March cotton will suffer a short-term setback that consolidates its recent surge and would not rule out a test of support around the pivotal 80-cent level during the days ahead. March cotton fell 0.54 cents to 82.35 cents/pound in overnight trading, while December edged 0.03 cents higher, to 79.76.