Pork Futures: Hogs Down

CHICAGO - Lean hogs closed amid moderate weakness on deteriorating cash hog prices, sell stops and commercial as well as fund liquidation. December/February bear spreads later weighed on the spot month but, along with short covering, offered downside nearby-February support.
calendar icon 20 November 2007
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Pork futures sagged on the open as more sellers than buyers entered the market after pork cutout's drop last Friday and given board premiums to CME's hog index. Also, Missouri direct and terminal hogs, which came in down as much as $2 per hundredweight, triggered panic selling and tripped stops.

"I guess people who thought cash would be better this week were finally hit with a dose of reality," a broker said.

Nevertheless, spot-December buying surfaced after the contract made a 50.65-cent low. Additionally, February moved up after bouncing off 58.50-cent psychological support that was also the Nov. 9 low.

Pork contracts' ability to fight back from morning lows prompted shorts to cover previously held positions.

However, December's new-found upward momentum subsided after the contract arrived at a narrow chart gap marked by Monday's 52.30-cent high and last Friday's 52.35-cent low. And, February's rally stalled after the trading month was re-united with earlier moving average resistance obstacles.

Tuesday's cash bids may depend on packer needs as they "fill holes" in this week's slaughter schedule.

Source: FXstreet.com
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