Pork Futures: Hogs Fall

by 5m Editor
16 August 2007, at 8:19am

CHICAGO - Chicago Mercantile Exchange hogs settled lower Wednesday on trailing cash hog prices, fund liquidation and unconfirmed talk that China may have de-listed U.S. pork packing plants. Pork bellies finished narrowly mixed.

Meanwhile, live and feeder cattle finished higher.

Lean hogs opened in negative territory due to spill over fund selling and buyer caution. Wednesday's light early volume reflected confusion among market participants about how to trade October after August expired on Tuesday, a broker said.

Although the October contract is far-removed from near-term fundamental influence, that did not stop bullish traders from responding to lower cash hog quotes. Distant hog contracts unraveled after spreaders sold February and December and bought spot-October. And, inconsistent Chicago Board of Trade corn futures kept potential far-month hog buyers on the defensive.

Nonetheless, lean hogs briefly floated up from session lows onforward-spreading and short covering. Upward momentum also at times landed October in positive trading territory and lifted October over the 40-day moving average threshold.

However, futures relapsed amid aggressively fund selling that tripped sell stops and violated major moving average support levels. Further bearishness was attributed to word that China de-listed several U.S. hog packing plants, which has yet to be confirmed. The de-listing means that some US companies are removed from China's approval list.

U.S. Meat Export Federation spokesman Lynn Heinze said he was not aware of China de-listing U.S. plants and is seeking information from the U.S.Department of Agriculture regarding the matter.

Early last week, CME hog futures suffered significant losses amid speculation that China might have bought less pork from the U.S. than some hog futures traders had anticipated.


5m Editor