Talk of the oversold condition and the stiff discount of futures to the cash market helped to support a bounce in hogs overnight. December hogs pushed to new contract lows yesterday and the lack of follow-through selling may have helped to spark the bounce.
Pork cutout values, released after the close yesterday, came in at $90.83, down 88 cents from Wednesday and down from $92.80 the previous week. This is the lowest pork value since July 18th.
The market closed near unchanged on the session yesterday with quiet trade. Traders see a sharper than normal break in the cash market into the fall but futures are already holding a larger than normal discount.
October hogs traded lower early in the session but managed to rally to trade 45 higher on the day into the mid-session before giving back the gains into the close. A shift to more positive outside market forces, a rally in cattle and talk of the stiff discount of October futures to the cash market helped to support the bounce off of the early lows.
Cash hogs traded steady to $1.00 lower as talk of expanding slaughter for Saturday helped support but the steady flow of interested sellers in the cash market helped to pressure. A sharp break in the loin market late Wednesday helped to drag cut-out values sharply lower, and this may have helped pressure cash yesterday.
The CME Lean Hog Index as of August 14th came in at 91.84, down 47 cents from the previous session and down from 93.62 the week before. This leaves October at a higher than normal discount to the cash market.
Slaughter came in at 419,000 head, which was above trade expectations. This brings the total for the week so far to 1.671 million head, up from 1.586 million last week at this time and up from 1.651 million a year ago. Ideas that the cooler weather into the weekend will spark improving weight gains and could add to the burdensome supply into the fall helped to pressure. Weights are already well above normal for this time of the year and have actually increased for the past two weeks during a period when weights typically fall.
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