October hogs saw an early rally above Monday's highs yesterday the market closed moderately lower for the session. Cash markets traded steady to $1.00 lower, and this may have contributed to some of the late weakness in the market yesterday. Weekly slaughter and pork production are expected to rise seasonally during the months ahead, which have helped drive October futures to a significant discount to the cash market. Some traders feel that cash prices will descend to the 90.00 level or lower going into the fall but much will depend on whether or not China and South Korea remain as active buyers of US pork. The cash index is at 107.34 today, and the stiff discount to the cash market may limit any potential weakness this morning. Improving weather has many traders suspecting heavier hogs weights ahead as well as a normal seasonal rise with slaughter during the weeks ahead. The CME Lean Hog Index as of August 12th came in at 107.34, down 43 cents from the previous session and up from 107.23 the week before. The estimated hog slaughter came in at 413,000 head yesterday. This brings the total for the week so far to 826,000 head, up from 803,000 head last week at this time and up from 800,000 head a year ago. Pork cutout values released after the close yesterday came in at $107.45, down $2.00 from Monday and down from $109.53 the previous week. This is the lowest pork cut-out since August 2nd.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.