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Pork Futures: Aug-Dec Hogs Fall, Others Rise

by 5m Editor
10 August 2007, at 9:08am

CHICAGO - August through December Chicago Mercantile Exchange hog contracts closed lower Thursday on disappointing cash hog results, spot-August liquidation and spreads, while remaining months-ended higher. Pork bellies settled mixed.

Meanwhile, live cattle posted losses versus feeders that finished on the plus-side of the ledger.

Uncertainty about lean hog's direction and initial deep-month profit taking after Wednesday's rally undercut pork futures soon after the opening bell. Steep cash hog price discounts and liquidation pressed spot-August below key moving average support levels ahead of the contract's scheduled Aug. 14 expiration.

And although October traded at a sizable discount to the spot contract, it was not spared from technical pressure or expectations for hog supply increases that typically occur during that time of year because of cooler weather.

However, despite CBOT corn's demise, and earlier profit taking by longs, far-month hogs finished higher because of speculative hedging amid relatively thin volume.

Extended cash hog price weakness is expected for Friday as processors attempt to resuscitate lifeless calculated packer profit margins.

And given recent ramped up hog slaughter rates and increased hog weights, traders were surprised by pork cutout's jump on Wednesday. Floor percipients will monitor the federal government's Thursday evening pork cutout survey to see whether a trend develops or if Wednesday's price increase was an anomaly.

Source: FXSTREET.com

5m Editor