July hogs closed 75 higher on the session yesterday, and posted the highest close since April 10th. The market rose after cash markets traded steady to $1.00 higher, and hog futures found support from moderately higher pork cut-out values from late Friday. A surge higher in fresh belly prices over the past week helped to lift cut-out values, and tighter than expected supply helped to boost cash markets. Even a sharp break in the stock market and a sell-off in other commodity markets failed to pressure. While China is importing less pork, total pork exports remain strong, up 6.9% from April of last year. Ideas that hog slaughter is declining at the same time that ribs and bellies are seasonally strong is also thought to be supporting the market. Pork cutout values released after the close yesterday came in at $87.39, up $2.59 from Friday and up from $83.02 the previous week. This is the highest pork trade since February 15th. Ribs were up $14.70 to $141.01 to help boost values and fresh bellies were up $3.41 to $110.60 as compared with $96.73 last week. Packer profit margins are still in the red, which could become an issue if pork prices slip but for now, pork prices are considered strong and margins are seen to be improving. Slaughter came in well below expectations at just 386,000 head. Many traders continue to talk of a marketing hole with a sharp slowdown in the supply of market-ready hogs. Slaughter was down from 408,000 head last week and down from 394,000 head a year ago as this time. The CME Lean Hog Index as of June 7th came in at 89.12, up 1.18 from the previous session and up from 84.09 the week before.
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