Pork Futures: Hogs Hit 5-Mo Lows; Bellies Plunge Limit

CHICAGO - Chicago Mercantile Exchange lean hogs closed lower on Monday, with July and August sinking to 5 1/2-month bottoms, on the heels oflast Friday's U.S. Department of Agriculture quarterly hog report.
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The dataimply industry expansion in the coming months despite expensive feed grain costs. Pork bellies ended limit down, with July and August posting new contract lows. Meanwhile, live cattle closed moderately lower and feeders weak.

It was anticipated that USDA's swine survey on Friday would cost lean hogfutures at least 30 points on the open. However, hog future's situation wasfurther exacerbated by unrelenting pork cutout pressure, cash hog prices thatfell $3.50 per hundredweight in parts of the country and processors operatingwith red ink on the books.

Additional front-month losses were attributed to bear-spreads, some of whichtied to August longs moving into October in preparation for the first official day of the Goldman roll on July 9 through July 13. The roll is done inconnection with the Goldman Sachs Commodity Index.

Nevertheless, speculative longs in search for a market bottom bought breaksthat cushioned declines. Also, a few bullish traders were enamored with Julyand August's discounts to CME's hog index and both contracts' oversold Relative Strength Index conditions.

Country hog buyers anticipated cash weakness extending into Tuesday aspackers shy away from supplies before several plants shut down for Wednesday's Independence Day holiday.

Source: FXSTREET.com
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