Pork Futures: Hogs Gain

CHICAGO - Most lean hog contracts posted gains on short covering and bear-spreading out of December into back months. That, along with fundamental nervousness, pressured December but was supportive for February and April.
calendar icon 16 November 2007
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Just as they did since last Friday, lean hogs followed a now familiar pattern of reversing the prior session's settlement. Pork futures Thursday rallied on short covering and speculators probing for a market bottom after Wednesday's downturn.

Pork cutout's rebound Wednesday, and steady Missouri direct and terminal hog market quotes early Thursday, contributed to the board's overall rally. Also, impressive calculated packer margins fed into notions that processors would keep a floor beneath cash prices heading into the weekend.

But, the widening gap between CME's index and spot-December triggered selling that dropped the contract from morning highs to near session lows. General midday cash hog price weakness exerted additional front-month pressure.

February slid from morning highs after some traders followed an agricultural research firm's Nov. 15 sell recommendation.

Steady to weak cash hog prices are predicted for Friday and ahead of a Saturday kill that is projected around 265,000 to 300,000 head, according to country hog buyers.

The issue of volatility might come into play Friday as participants square positions before the weekend and as a few others look forward to much-needed rest during the Thanksgiving holiday.

Pork cutout's snap back Wednesday was significant because it came at a time of huge hog slaughter rates. However, traders are anxious to see whether Wednesday's rebound signals an uptrend or was an aberration.

Source: FXstreet.com
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