Lean hog futures may face pressure from an ongoing seasonal erosion in cash fundamentals The CME lean hog index is down 80 cents to $86.97 (as of Nov. 18), the lowest since Feb. 7. Rising slaughter and pork production are pressuring wholesale pork. Pork cutout values fell $1.45 Monday to $91.99 as weakness in six of seven primal cuts sent the average to an 11-month low. However, movement rose sharply, to 370 loads. Seasonal pressure on cash fundamentals will limit buyer interest in nearby December hog, though bullish prospects once the seasonal pressure concludes should limit selling in deferred futures.
February lean hogs finished lower by 7.5 cents today, settling at 90.075 with a wider trading range from the previous day. The USDA cold storage report came out at 2pm CST today showing that frozen pork supplies were down 5% from the previous month but up 16% from the previous year while stocks of pork bellies were up 10% from the previous month and up 246%[!] from the previous year. With the report coming out after the market close, I suspect we will see some supportive price action for tomorrow’s trade but with the shortened week I believe the impact on price won’t be significant.
USDA Cold Storage report:
Total red meat supplies in freezers were down 4 percent from the previous month but up 11 percent from last year.
Total pounds of beef in freezers were down 3 percent from the previous month but up 8 percent from last year.
Frozen pork supplies were down 5 percent from the previous month but up 16 percent from last year.
Stocks of pork bellies were up 10 percent from last month and up 246 percent from last year.
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