The market remains in an uptrend in recent weeks and a continued jump in pork values could help support the market into next week. June hogs saw an impressive outside-day higher with a close near the highs. December hogs closed slightly lower on the session yesterday with an inside trading session. The market traded both sides of unchanged in a tight range yesterday after testing Monday's lows early.
Cash markets were steady on the day, and this failed to provide much leadership. Pork cut-out values late Monday were mostly unchanged as well. However, pork cutout values, released after the close yesterday, came in at $85.69, up $1.40 from Monday and up from $83.90 the previous week. This is the highest pork value since August 24th as loin values jumped to $94.99 as compared with $88.69 last week. The loin rally could spark talk of better exports.
Talk of the overbought condition of the market and ideas that production levels are on the rise helped to limit the buying support yesterday. The discount of December to the cash market helped to provide some underlying support and the surge in pork overnight is expected to improve packer margins and could support the cash into the weekend. This could widen the discount and spark buying in futures. The 2-day lean index jumped to 80.46, which left December hogs at a 360 point discount to the cash. The index is up from 76.12 last week at this time.
Slaughter came in about as expected at 434,000 head. This brings the total for the week so far to 869,000 head, up from 863,000 last week at this time and up from 850,000 a year ago. Traders appear to believe that the upside may be limited for the cash and/or pork product markets as weekly slaughter levels seasonally push higher into late November.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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