The discount of futures to cash might provide some short-term support but the upside appears quite limited given the potential for weakness in pork product markets and a down trending cash market into late November. Pork cutout values, released after the close yesterday, came in at $87.79, down 92 cents from Wednesday but up from $87.69 the previous week. Choppy trade in various pork products has been a factor this fall. Loins were down $7.38 yesterday to $90.04, with hams were up $4.18 to $79.51.

December hogs closed lower on the session yesterday with an inside-trading day. The lack of direction from the cash market and ideas that the recent higher trade could slow demand helped to spark the choppy trade. Concerns that pork values may be near a near-term peak helped to spark the early selling but solid pork product trade, the discount to the cash market and firm packer margins that could hold cash steady were factors to help support.

The CME Lean Hog Index as of October 16th came in at 83.49, up 28 cents from the previous session and up from 81.78 the week before. This leaves December hogs at a discount of 465 points to the cash market and should help provide underlying support. Cash hogs traded steady as packers fill their needs for the week. Deferred contracts were also higher with June up 30 points on the day as higher grain markets helped to support.

Slaughter came in below trade expectations at 431,000 head. This brings the total for the week so far to 1.731 million head, down from 1.732 million last week at this time but up from 1.711 million a year ago. Actual US pork production for the week ending October 6th came in at 478.3 million pounds, up from 473.2 the previous week and up 4.3% from a year ago. Supply looks to remain high into mid-November and weights are on the rise.
 

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