October hogs closed higher for the third session in a row yesterday, closing at the highest price levels since August 8th as the discount of October futures to the cash market has now reached historically wide levels. The cash index is at 107.77 with October futures at 89.97, and some traders feel that this wide a spread might suggest that the downside is limited during the short-term. Cash hogs traded steady to $1.00 lower with many traders projecting a steady to weaker trend for the cash market again for today as supply may be reflecting a seasonal increase. Positive packer profit margins may help to limit the decline in cash prices. Ongoing ideas that buying from South Korea and China might offset a normal seasonal decline in cash hog prices also was thought to be a positive factor for the market. A sharp break in the US stock market suggests that many traders are going to keep a close eye on developments in Europe and their possible impact on the global economy. The CME Lean Hog Index as of August 11th came in at 107.77, down 7 cents from the previous session and up from 106.55 the week before. The estimated hog slaughter came in at 413,000 head yesterday. This was up from 396,000 head last week and up from 407,000 head a year ago as this time. Pork cutout values released after the close yesterday came in at $109.45, down 40 cents from Friday and down from $110.19 last week.
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