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Pork Futures: Hogs Gain Ground

by 5m Editor
14 August 2007, at 8:33am

CHICAGO - CME hog contracts closed higher, guided by sentiment about where spot August will settle when it expires on Tuesday, short covering, and periodic October/December bear spreads in advance of the Goldman roll period.

Except for an initial break immediately after the opening bell, far-month hog contracts traded in the green for most of the session despite CBOT corn's inability to hold initial gains. Pork futures also pulled back at the outset due to follow-through selling, cash uncertainty and Missouri direct hog's $2per hundredweight lower price quote.

Processors' trimming of plant operating hours, because of unsatisfactoryprofit returns, at first appeared to have a more bearish than bullish impact onfutures, a broker said. There is the possibility that supplies could back up on farms at a time when hog numbers appear to be plentiful, he said.

Nevertheless, prospective futures buyers favored October's discount to the spot-August contract and compared with the exchange's hog index. Also, October periodically was the long side of spreading out of August and December.

Extended cash hog price weakness is expected on Tuesday. However, those players who are still trading spot-August will continue to track the contract's progress heading into its expiration on Tuesday, scheduled for 1 p.m. EDT (1700GMT).

And, market participants will attempt to gain a better understanding of how to trade October that may inherit fundamental tension as well as Goldman rollactivity.

Source: FXSTREET.com

5m Editor