Pork Futures: Hogs Gain

CHICAGO - Lean hogs closed firmer on short covering and "butterfly" spreads. That consisted of traders selling June and August, which represented the wings of the butterfly, and bought July as the butterfly's body.
calendar icon 30 May 2007
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Also, local buying, July's oversold Relative Strength Index condition, and June and July's slight discount to CME's hog index attracted buyers. Furthermore, last Friday's pork cutout rebound emboldened market bulls.

Some in the pit followed an agricultural research firm's advice and bought August outright, and worked August/February and October/December bull spreads.

However, cash prices that trended lower as the morning wore on, and tightening calculated packer profit margins, at times limited spot-June buying interest.

Nonetheless, light hog weights and the prospect that packers could post a sizable Saturday kill to make up for Monday's downtime piqued the interest of potential futures buyers. Country buyers anticipated a mixed cash trade for Wednesday.

Traders will monitor the federal government's weekly average Iowa/Southern Minnesota hog weights on Wednesday to determine if hogs that that were moved ahead of the holiday weighed more than the previous week.

Source: FXSTREET.com

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