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Pork Futures: Hogs Sink On Fund Sales, Sell Stops

by 5m Editor
6 March 2007, at 2:20pm

CHICAGO - Chicago Mercantile Exchange hogs posted steep discounts Monday on fund liquidation, sell stops and bearish fundamentals including generally lower cash returns. Futures lost further ground after front months were unable to hold above Friday's lows and June violated 40-day moving average support.

Buyer reluctance in other commodity and equity markets spilled over into the pork pit. And, give-and-take between April/June bull spreaders and spot-month rollers into June ahead of the Goldman Roll hastened declines.

The roll, which will officially begin Wednesday and wrap up next Tuesday, consists of funds moving some of their April long positions into deferred contracts.

What's more, prior to the close April and June slid deeper into the red after both trading months briefly dipped below the 65.00- and- 75.50-cent psychological levels.

Spot April ended 135 points lower at 65.00 cents a pound. Most actively traded June settled 142 points lower at 75.47 cents. Both contracts ended near the bottom of their trading ranges that doubled as 5 1/2-week lows.

Lean hogs wilted on the open on profit-taking after Friday's modest runup; pork cutouts' continued erosion; and the prospect of increasing supplies as some hog farmers in the Midwest transport animals that were confined due to late last week's winter storm.

The U.S. Department of Agriculture's daily estimated livestock slaughter showed Monday's hog kill at 416,000 head. The USDA also revised Friday's hog kill downward to 246,000 from 263,000 and adjusted Saturday's slaughter downward to 81,000 head from 91,000.

Source: FX Street

5m Editor