The jump in weights, a weak economic outlook and a long liquidation selling theme for nearly all commodity markets looks to be a negative force for hogs today. Exports represent nearly 25% of the monthly pork production in the US, so the sudden drop in export activity can cause a short-term surge in available pork in the US. October futures normally trade at a significant discount to the cash market, but they closed at a premium yesterday. The futures may see the need to trade at a discount to cash again unless there is a sudden revival in commodity markets in general, which seems unlikely given the weakness overnight. The surging US dollar and a collapse in energy and equity markets overnight plus weakness in grain markets are seen as negative forces for hogs today. October hogs pushed moderately higher on the session yesterday and moved to their highest level since August 16th early, but the market could not hold on to the gains and closed just slightly higher on the day. Traders are looking for the Cold Storage report this afternoon to show a decline in frozen pork stocks in storage. Weekly average weights reached 268.4 pounds and moved from sharply below year ago levels in late July to near last year's level of 268.9 pounds. This was up from 267.2 pounds last week, which is a big jump in just one week. The CME Lean Hog Index as of September 19th came in at 89.07, up 59 cents from the previous session and up from 86.10 the week before. The estimated hog slaughter came in at 425,000 head yesterday. This brings the total for the week so far to 1.274 million head, unchanged from last week at this time but up from 1.243 million a year ago. Pork cutout values, released after the close yesterday, came in at $96.05, up 21 cents from Tuesday and up from $95.72 the previous week. This is the highest pork trade since August 31st. Traders are beginning to position for the September 28th Hogs and Pigs report.
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