Hog futures were higher today in the deferred months but settled lower today in the December with a price of 85.65. There was the possibility today that the market could’ve seen follow through selling pressure from Yesterday’s session due to a continued slump in the cash market and also a seasonal rise in slaughter numbers. The CME lean hog index is down another 60 cents to $90.28 which is the lowest since mid-February. Further gains in direct prices could suggest a short-term low in the CME index. Wholesale pork remains under pressure. Pork cutout values fell $1.92 Tuesday to $95.03, the lowest since early February. December lean hogs fell $1.475 to $85.575.
Furthermore, there is a wide discount of the Dec futures price to the cash market right now and that could stabilize prices or even give some rallying support to the December contract. One thing to keep an eye on in my opinion is that hog weights are well below last year and the five-year average, and that should give the market a little more support here going forward.
Finally, the USDA WASDE report came out today at 11am CST and showed that Pork production is lowered on a slower expected pace of slaughter which, again, should give the market something to stand on and at the very least have prices consolidate around current levels, in my opinion.
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Peter McGinn
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