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Pork Futures: Most Hogs Tumble

by 5m Editor
7 August 2007, at 9:21am

CHICAGO - With the exception of spot August Chicago Mercantile Exchange hog futures that posted a firm finish on cash hog price gains, the remaining contracts closed down sharply on fund and commercial liquidation. August pork bellies closed down the 450-point expanded price limit while other contracts ended higher.

Meanwhile, live cattle settled weak against feeder cattle, which closed firm.

During most of the session, August lean hogs garnered support from higher cash hog prices and speculation about where the spot month and CME's hog index would converge when August expires from board trading on Aug. 14.

Nevertheless, spot August was at times pressured by August/October bear spreads, Friday's pork cutout weakness and skimpy estimated packer profit margins.

Furthermore, some lead-month hog buyers were put off by worrisome hog slaughter rates even though four hog processing plants were offline on Monday due to a scheduled summer floater holiday.

Other hog contracts fared much worse as profiteers slid money off the table after Friday's jump to new contract highs. October's rare price premium to the August contract, October's over bought Relative Strength Index condition, and commercial and fund liquidation hastened declines.

Additionally, Chicago Board of Trade corn's steep drop in overnight business stripped thinly traded distant hog months of buying interest.

Bullish hog traders anticipate that packers will pay at least steady money for supplies on Tuesday as sultry temperatures drift into the Midwest that could slow hog weight gains and hamper conception rates.

On the other hand, bearish traders point out that already warm summer weather in parts of the nation's mid section has done little to curb hog slaughters that, they said, could further drag on wholesale pork demand.

Source: FXSTREET.com

5m Editor