July hogs closed up the 3 cent limit yesterday and up 3.4% for the session, with many traders feeling that the market found support from a surge up in ham prices late Wednesday and ideas that the slaughter pace will seasonally decline into the summer. With higher pork cut-out values, packers paid steady to $1.00 higher in the cash market, and may have added to the positive tone for futures. A sharp rally in pork values helped spark a rally in the cash market and helped to drive futures prices sharply higher and left July hogs at a stiff premium to the cash market. The CME Lean Hog Index as of May 29th came in at 84.51, down 47 cents from the previous session but up from 84.20 the week before. Packer margins are still in the red, weights are still sharply up from last year and the 5-year average, and the rally in the US Dollar could discourage potential importers of US pork. However, many in the market see the seasonal decline in slaughter and the jump in pork values this week as a positive short-term market factor. Pork cutout values released after the close yesterday came in at $81.95, up $1.17 from Wednesday and $78.64 the previous week, and are at their highest levels since May 17th. The estimated hog slaughter came in at 424,000 head yesterday. This brings the total for the week so far to 1.271 million head, down from 1.667 million head last week at this time but up from 1.266 million head a year ago.
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