Pork Futures: Most Hogs Snap Back

CHICAGO - Lean hogs closed moderately higher on short covering and August/October bull-spreads that, along with bearish fundamentals, weighed on spot August but pumped up October. October also capitalized on October/December and October/June bull spreads.
calendar icon 26 July 2007
clock icon 2 minute read

Despite steady-to-$1 per hundredweight higher Missouri direct hog quotes,lean hog contracts sagged on the open following Tuesday's pork cutout misstep. What's more, subsequent lower cash hog prices, and fading estimated pork packerprofit margins, were signs to some in the pit that packers may not be compelled to pay up for near-term supplies.

Also earlier, August and October were saddled with their slightly overbought Relative Strength Index conditions. And, CME hog's bearish discount to bothcontracts dragged on August and October for most of the session.

Nonetheless, a spate of short covering rescued front-month hogs from session basements. August floated up from lows amid speculation that hot weather in thenext week or so might slow hog shipments and underpin the spot contract. And, October's relative discount to August attracted scale-down October buyers.

However, country hog buyers anticipate steady to lower cash hog bids for Thursday as processors struggle to get a grip on sliding profit margins. Also,daily hog kill rates running above 390,000 head may further deter wholesalemeat- buying interest at current price levels.

Source: FXSTREET.com
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