Pork Futures: Hogs Plummet

CHICAGO - Chicago Mercantile Exchange hogs finished down sharply Tuesday on generally lower cash hog prices, fund selling and sell stops. Pork bellies also fell sharply.
calendar icon 19 September 2007
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Meanwhile, live cattle and feeder cattle rallied.

Lean hogs sagged on the open after Monday's pork cutout drop and Chicago Board of Trade corn's steep overnight plunge. Furthermore, potential bullish hog traders had lingering doubts whether China would resume US pork imports after a shipment was recently returned containing traces of the banned chemical ractopamine.

"At least for now, it looks like the bloom is off the rose as far as China is concerned," said one broker.

However, spot-October and nearby-December hogs mounted a futile comeback as shorts covered. Also, break-buyers were attracted to both contracts' oversold Relative Strength Index conditions.

Nevertheless, futures resumed their downward spiral after buying dried up and December fell through the 100-day moving average support floor which tripped sell stops. Also, some midday direct-market hogs came in down more than $3 per hundredweight.

Spreaders mostly sold December and bought October, which cushioned spot-October's fall but sometimes exerted additional stress on December. Also, December/February forward positioning slowed December's fall, but weighed heavily on the February contract.

The cash hog forecast for Wednesday is clouded by processors who have near-term needs met versus those who may push for what is expected to be another hefty weekend hog slaughter.

Source: FXSTREET.com
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