Pork Futures: Hogs Gain; July-Aug Bellies Jump Limit

by 5m Editor
6 July 2007, at 8:36am

CHICAGO - Chicago Mercantile Exchange lean hogs closed higher onshort covering, July/August and August/October bull spreading and notions that processors may be strapped for supplies this weekend and early next week. Pork bellies ended sharply higher, with July and August limit up.

Meanwhile, live and feeder cattle futures posted sizable gains during thesession.

Lean hogs opened firm despite negative signals from Tuesday's pork cutout anderoding calculated packer profit margins. Pockets of cash firmness sent market bears running for cover and funds joined in as August ticked upward.

Bullish players were also emboldened by July and August's substantial discount to CME's hog index. And, front-month's oversold Relative Strength Index conditions were buying points for longs who also wandered into far-months due to supportive Chicago Board of Trade corn contracts.

Country hog buyers and floor-bulls anticipate steady to firm hog prices for Friday. Packers will attempt to string together animals for Saturday's kill estimated from 50,000 to 55,000 head in the midst of lighter-weight hogs basedon the federal government's weekly Iowa/Southern Minnesota average hog weight item.

July's settlement above 72.00-cent psychological support is seen as encouraging for bullish market participants who are looking for a foundation from which spot-July can make another move up, a trader said. However, July and August has to trade beyond 10-day moving average resistance points beforefurther "big" gains can be realized, he said.

August longs made a late-day push into October in advance of the first offive days of the Goldman roll that is slated to begin in livestock pits on 9 July. The roll is done in association with rules governing the Goldman Sachs Commodity Index.


5m Editor