April hogs closed moderately lower and closed near the lows of the day yesterday for the third session in a row. Weakness in outside market forces plus higher than expected pork production last week seen as negative factors for the market early in the session. Cash markets were steady to $0.50 lower yesterday and are forecast to be lower again today. Negative profit margins from packers remain an obstacle for hog futures to build onto the current premium above the cash market. Many traders expect packers to cut-back on their slaughter levels this week in order to produce better margins. Packers are hoping for lower cash markets and higher pork product prices due to lower supply and will monitor average weights closely. The CME Lean Hog Index as of February 2nd came in at 88.07, down 2 cents from the previous session but up from 87.35 the week before. This leaves April hogs at only a slight premium to the cash market, as the lack of a premium might help to limit any potential downside for April hogs during any selloffs. The estimated hog slaughter came in at 419,000 head yesterday, which was higher than expected and somewhat positive development. Slaughter was up from 400,000 head last week and up from 414,000 head a year ago as this time. Pork cutout values released after the close yesterday came in at $84.75, down 35 cents from Friday but up from $83.91 the previous week.