Pork Futures: Hogs Lower

CHICAGO - Chicago Mercantile Exchange reportsd lean hogs closed lower on profit-taking after Tuesday's steep climb, that day's pork cutout drop and deteriorating cash hog prices.
calendar icon 15 November 2007
clock icon 3 minute read
Pork futures wasted little time ticking downward on the heels of Tuesday's $1.22 per hundredweight pork cutout setback. Also, potential buyers were content to observe from the sidelines amid sentiment that Tuesday's board rally was overstated.

Also, hog contracts took the path of least resistance as cash hog bids faded as the day wore on despite impressive calculated packer profit margins. December and February's noticeably bearish premiums to CME's hog index benched buyers and emboldened sellers.

And, December was also under added pressure due to late session December/February and December/April bear spreads.

Country hog buyers and floor brokers anticipate extended cash weakness for Thursday.

Bearish factions continue to press the notion that packers may be able to resist bidding up for supplies as the industry next week prepares to throttle back production in preparation for the Thanksgiving holiday.

However, hog futures established a recent pattern of following up session losses with rebounds the next day, so market bulls will wait to see if the trend continues Thursday.

Meanwhile, hog market participants, who also trade cattle futures, may adopt a more cautious posture Thursday on the eve of Friday's USDA cattle numbers.

Lean hogs Wednesday reached a 206,392 contract open interest record that surpassed the previous Nov. 7 record of 203,568.

And, USDA's weekly Iowa/Southern Minnesota average hog weight item showed area hogs for last week at 268.9 pounds, compared with 269.7 the week before and 269.8 a year ago.

Source: FXstreet.com
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