June hogs closed 125 lower on the session yesterday, and feel to the lowest price levels since January of 2011. Fears that US beef would be banned due to an incidence of mad cow disease helped to drive cattle futures limit down into the close, which dragged the hog market down to the lows of the day. The cow was an isolated case and did not enter the food chain, however, so June hogs recovered and were trading just 60 lower on the day after the USDA press briefing and then traded as much as 95 higher during the overnight session. Many traders believe that cash hogs will trade close to unchanged levels over the near-term as tightening supply is balanced against weaker packer profit margins. Weaker pork cut-out values late Monday due to loin weakness, plus weakness in cattle futures were thought to have pressured the market. Pork cutout values released after the close yesterday came in at $77.62, up 21 cents from Monday and up from $76.75 the previous week. The CME Lean Hog Index as of April 20th came in at 82.74, down 5 cents from the previous session but up from 82.64 the week before. June futures currently have a smaller than normal premium to the cash market. The estimated hog slaughter came in at 415,000 head yesterday. This brings the total for the week so far to 828,000 head, up from 826,000 head last week at this time and up from 687,000 head a year ago.
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