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Pork Futures: Hog Prices Plummet

by 5m Editor
31 December 2007, at 7:48am

CHICAGO - Chicago Mercantile Exchange lean hogs closed sharply lower following Thursday's bearish hog report, sell stops and bear spreads.

Pork bellies and live cattle finished narrowly mixed while feeder cattle closed flat to up slightly.

Hog futures shed anywhere from 25 to 50 points on the open as traders reacted to the U.S. Department of Agriculture's quarterly swine report Thursday. The data implied continued hog herd expansion and growing supplies next year that could pressure cash hog prices.

However, futures selling stalled at one point due to scale-down buying driven by ideas that some of the report's bearishness was built into Thursday's board losses.

Also, February's and April's oversold Relative Strength Index conditions attracted break-buyers. And bullish speculators viewed February's and April's new contract lows as buying opportunities.

But after a short rest, futures resumed their downward spiral as locals probed for sell stops beneath the market. What's more, generally lower cash hog returns, and packers wading through a sea of hogs during the holiday weekend, contributed to market heaviness.

Selling February and buying April and June on spreads exerted additional spot month pressure. Some February-April bear positioning was attributed to pre-Goldman roll activity.

Source: FXstreet.com

5m Editor