Pork Futures: Hogs, Live Cattle Buckle

CHICAGO - Chicago Mercantile Exchange hogs closed lower Wednesday on under-performing cash hog prices, sluggish wholesale pork demand and profit taking after Tuesday's rally to new contract highs. Pork bellies tanked, with August settling locked-limit down.
calendar icon 2 August 2007
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Meanwhile, live cattle posted significant losses. And, feeders ended moderately lower.

Lean hogs' mostly firm open amid residual buying quickly unraveled as skittish longs digested Tuesday's $1.41 per hundredweight pork cutout plunge. Also, earlier buyers turned sellers in response to Missouri direct hog's $0.50 to $1 per hundredweight shortfall and shrinking calculated packer profit margins.

Spot-August came under additional pressure after the contract initially violated 40-day moving average support and later slipped beneath the 20-day moving average. That in part was attributed to locals who bailed out of the spot-month amid spreads and landed in October and December.

Deep-deferred hog losses were worsened by low volume that created "air beneath the market," and Chicago Board of Trade corn's gradual retreat.

Country hog buyers anticipated extended cash deficits for Thursday due to skimpy estimated packer profit margins, tepid wholesale pork buying interest and irksome hog kill rates.

Wednesday's board action put spot-August at a slightly bullish discount to CME's hog index. On the other hand, August now has considerable technical resistance to cope with on Thursday.

Source: FXSTREET.com
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