With some positive demand news and higher pork prices yesterday, the market may see a slowdown in the aggressive selling seen in recent days. The stiff discount of futures to the cash market and a weak tone to grain markets overnight may also offer some strength.
August hogs closed 47 lower on the session yesterday and experienced the lowest close since June 26th. October hogs collapsed to close sharply lower and pushed to a new contract low and the market pushed to new lows overnight. The CME Lean Hog Index as of July 13th came in at 98.05, down 74 cents from the previous session and down from 100.58 the week before. This leaves October hogs at a $20.50 discount to the cash market, and this may help slow the selling pace.
The market traded a little higher on the session early yesterday but turned lower into the mid-session. Talk that the nearby contracts are now at a stiff discount to the cash market helped to firm prices. Packer margins are in the red and cash markets came in steady to $1.50 lower. Traders see the hot weather remaining over the central part of the country for much of the next two weeks, which might keep the demand tone weak. The northern Corn Belt cools down into the end of this week, which could boost near-term marketings.
Slaughter came in at 398,000 head, which was higher than expected and a positive for demand. This brings the total for the week so far to 773,000 head, down from 788,000 last week at this time and down from 807,000 a year ago. Pork cutout values, released after the close yesterday, came in at $90.03, up $1.22 from Monday and up from $89.59 the previous week. The jump may help improve packer margins.
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