Many agricultural futures contracts, including hogs and cattle, have been extremely successful in recent years as evidenced by the steady increase in open interest volume.

The delisting of the belly contract shows that, in the end, futures contracts needs to strike a delicate balance between hedgers and speculators.

The frozen pork belly contract was no longer seen by end users as an effective hedging instrument, particularly given the shift towards using more frozen bacon.

Also, the seasonality of pork belly prices no longer is what it used to be, with bacon becoming a staple of foodservice menus year round.

As a result, the industry found the frozen belly contract trading between February - August as insufficient to meet its hedging needs.

The weekly production data showed only modest increases in meat protein supplies for the week ending 16 July.

Beef production for the week rose just 0.2 per cent from a year ago, mostly due to higher cow slaughter levels.

Nevertheless, cattle futures declined sharply this week as market participants fretted over the impact of extremely hot weather on beef demand as well as the pace of cattle auction sales.

Faced with deteriorating pastures and high feed costs, cow-calf operators have been trying to push more feeders into feedlots.

The nearby feeder cattle futures contract (August) lost almost eight dollars per/cwt or 5.5 per cent last week.

Nearby live cattle futures also declined by almost 400 points for the week.

The beef cutout actually managed to gain modestly from the prior week but the heat wave and surging cash corn values were seen as short term negative for feedlot sales.

As the heat wave spreads across multiple states, keep an eye on hog and cattle weights and the resulting impact on overall protein supplies.