October and December hogs closed sharply lower on the session yesterday as near-term cash fundamental news was widely considered to be weak. Ideas of less packer demand into next week were also thought to have pressured the market. Deferred contracts posted smaller daily losses, and some closed higher as grain market strength was seen to have supported the market. The market pushed moderately lower early on in the session yesterday to a 6-session low but saw some recovery off of those early lows later in the day. Overnight, October hogs declined to their lowest levels since July 1st. In June and early July there were some in the market calling for light expansion in the industry going into next year. However, there are ideas of some contraction now that corn has risen above $7.70 into harvest. Pork cutout values released after the close yesterday came in at $100.63, down $1.16 from Friday and down from $106.69 the previous week. This is the lowest since July 25th and some traders feel there may be a weaker demand tone into next week due to lost demand from the East Coast over the past several days. Cash hogs are expected to trade lower again today and packer demand is slowing due to one less slaughter day next week, slower margins and fears of slow demand from the East Coast. Rib prices took another dive overnight, falling to $136.89 from $148.67 last week at this time. Cash markets were steady to $1.00 lower yesterday. The CME Lean Hog Index as of August 25th came in at 100.74, down 1.02 from the previous session and down from 105.09 the week before. The estimated hog slaughter came in at 422,000 head yesterday. This was up from 418,000 head last week and up from 414,000 head a year ago as this time. The extent of the cash market break may depend on pork exports from the US. If China is a strong buyer, this might limit a slide in prices.
Join the Discussion