Heavier weights and demand concerns helped to pressure the market off of the highs yesterday but surging bacon prices and the stiff discount of December futures to the cash market should support futures today.

The CME Lean Hog Index as of October 29th came in at 84.50, down 36 cents from the previous session and down from 84.87 the week before. This leaves December hogs at a 625 point discount to the cash market which should help limit the selling pressure.

Pork cutout values, released after the close yesterday, came in at $85.79, up 99 cents from Tuesday and up from $85.42 the previous week. Once again, a surge in ribs and cash belly prices helped support the strong jump in cut-out and these are products which may see seasonal weakness into late November. Cash bellies jumped $5.04 to $132.67, which is up 7.8% from prices just one week ago.

Can strong bacon demand at this time of the year be considered a sustainable force?

Weekly average weights for Iowa-Southern Minnesota as of October 27 came in at 272.8 pounds, up from 271.7 the previous week and down from 273.5 pounds last year. The 5-year average is at 270.1 pounds so current weights are clearly higher than normal.

December hogs closed just slightly higher on the session yesterday as the market saw a late break to give back much of the early gains. The market traded sharply higher into the pit opening and remained firm into the mid-session. Continued strong pork values late Tuesday and news of firm trade in the western Corn Belt helped to support. In addition, the stiff discount of futures to the cash market helped support. Some weak cash market news for the east and ideas that pork demand could be weak for a few more days helped to limit the advance.

The estimated hog slaughter came in at 434,000 head yesterday. This brings the total for the week so far to 1.279 million head, down from 1.303 million last week at this time and down from 1.282 million a year ago.
 

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