Most agricultural futures were lower on the day following sharp declines in equity and energy markets. Grain futures were lower, led by a reversal in soybean futures. The nearby September soybean contract was down 86 cents while the nearby corn market was down 14 cents per bushel. It is sort of odd to see hogs leading the parade after a lost summer rally and an ever worse outlook for the fall. Some of the talk in the market about recent hog gains centered on the apparent strength of the hog prices in the cash market. The IA/MN lean hog carcass value (wt.avg) was quoted on Tuesday at $49.46 /cwt, $1.76 higher than the previous day and $3.73 higher than the previous week.

Cash hog prices have followed higher prices for pork at the wholesale level. Gains for some pork items, especially hams, boosted overall cutout values and provided some hope that maybe not all was lost for hogs this fall, hopes that a sudden surge in export orders could boost packer demand going forward. Indeed, as the charts to the right show, there was some improvement in cash pork prices last week, especially with regard to hams. The price of 23- 27# hams rose from around $44/cwt on 18 August to as high as $65/cwt on 28 August.

Indeed, as the charts below show, there was some improvement in cash pork prices last week, especially with regard to hams.

The price of 23- 27# hams rose from around $44/cwt on August 18 to as high as $65/cwt on 28 August. The spike caught many by surprise and was attributed to a rush of export orders that apparently cleaned up the spot market and caused domestic end users looking to fill routine orders to raise bids in order to secure product. But the ham story is old news at the moment and looking at the wholesale pork market, it is difficult to get real excited. Ham prices have declined in the last two days and the price for 23-27# hams on Tuesday was at $59/cwt, still a higher than it was two weeks ago but $6 lower than on Friday. Even more importantly, much of the increase in overall cutout values was due to the rise in ham prices rather than a broad based improvement in pork prices.

On Tuesday, the pork cutout value was quoted by USDA at $54.71/cwt, $3.11/cwt lower than on Monday. In order for the rise in hog prices to be sustained this fall, demand has to keep up at a time when hog supplies tend to be at the highest point for the year. High cold storage inventories and uncertainty following predictions of a second outbreak of the flu virus this fall will continue to weigh on pork prices. How long hog values defy gravity remains to be seen.