The hog market continues to look past the short-term cash fundamentals to a tightening supply situation into the 1st quarter. A supportive Cold Storage report on Friday and improving packer margins are factors which helped support strong gains on Monday. The market looks set to challenge the November highs.
The CME Lean Hog Index as of December 20th came in at 82.24, up 47 cents from the previous session but down from 82.59 the week before. This leaves the futures market at a premium to the cash market, but that premium is not higher than normal. Given the outlook for a record drop in production from the 4th to the 1st quarters, hog futures seem to be in a position to take a higher than normal premium to cash.
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