Pork Futures: Hogs Mainly Fall

CHICAGO - Most Chicago Mercantile Exchange live cattle contracts Tuesday ended up slightly on bear-spreading out of December and February into April, and pre-Goldman roll activity.
calendar icon 7 November 2007
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CME hogs closed mostly weak on cash hog's persistent erosion and funds who shifted some of their spot-December positions into February in advance of Wednesday's Goldman roll kickoff.

Pork futures spiked on the open spurred by short covering and December and February's oversold Relative Strength Index conditions. Also, December's discount to CME's hog index, and Monday's front-months' slide to new contract lows emboldened buyers.

But as in previous sessions, futures were unable to sustain upward momentum in the face of massive hog kills and steadily sinking cash hog values. Additionally, several traders bailed out of December and February and landed in distant contracts to avoid choppy action stirred by spreaders and rollers.

Also, spot-December slumped noticeably after subsequent cash trading at major direct hog markets reflected packers' disinterest in paying up for supplies. December sell stops were tripped by aggressive selling by commercial and local traders.

Country hog buyers predict steady to weak cash hog bids on Wednesday due to heavy pre-booking of animals by packers.

Futures' pullback Tuesday put December and February deeper into oversold chart territory. That again could motivate board buyers Wednesday as they continue their quest for a market bottom.

The spot-December's 51.00-cent and nearby February's 58.50-cent prices are crucial psychological support levels. Some believe significant losses could ensue if those floor supports are violated Wednesday.

Pork bellies ended higher on short covering, speculative hedging and underlying technical support.

Steady midday fresh belly prices and maneuvering before CME's weekly belly storage data on Tuesday at 5 p.m. CST contributed to advances.

Source: FXstreet.com
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