April hogs closed 245 points higher on the session yesterday, with the general expectation for a continued steep uptrend in the cash market seen as supporting the futures market. June hogs also pushed sharply higher to an all-time record high of 102.60. With cash near 83.78, some traders believe the upside may be limited but strong export sales expectations, higher pork values again yesterday as well as bitter cold weather in the Midwest were seen as positive factors for the market. Many traders see cash markets steady to $1.00 higher for today, but there are also widely held concerns that futures prices are getting ahead of the cash market rally and the large premium of futures over cash may be a limiting force. April futures closed at 93.70, and the CME Lean Hog Index as of February 8th came in at 83.78, up 1.04 from the previous session and up from 80.92 the week before. While the premium remains wide, many traders see a strong uptrend in cash prices along with continued strong exports as a reason for the current large premium. South Korea officials overnight indicated that they plan to expand tariff-free pork imports to ease the supply shortage. In the monthly supply/demand report this week, the USDA lowered their estimate for pork production for 2011 by 15 million pounds. There was also an adjustment higher in exports by 60 million pounds to 4.675 billion pounds, which is up 10.5% from last years pace. The estimated hog slaughter came in at 421,000 head yesterday. This brings the total for the week so far to 1.670 million head, up from 1.420 million head last week at this time and up from 1.657 million head a year ago. Pork cutout values released after the close yesterday came in at $88.95, down 21 cents from Wednesday and down from $89.48 the previous week. Actual US pork production for the week ending January 29th came in at 453.7 million pounds, up from 451.9 million pounds the previous week and up 4.56% from a year ago.
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