Even with the surge in pork values in recent weeks, the packer margins are still in the red and traders believe that the first sign of better supply could help push cash prices lower as packers attempt to repair margins. The CME Lean Hog Index as of June 18th came in at 96.88, up 1.63 from the previous session and up from 91.04 the week before. This leaves July hogs at a discount to the cash market. Pork cutout values, released after the close yesterday, came in at $97.02, down 39 cents from Tuesday but up from $89.23 the previous week. Weekly average weights for Iowa-Southern Minnesota as of June 16th came in at 272.1 pounds, down from 274.4 the previous week and up from 268.3 pounds last year. The sharp drop in one week is supportive and suggests that producers are a bit more current with marketings. July hogs closed slightly lower yesterday and pushed down for the second day in a row as traders continue to anticipate a sluggish pork demand outlook due to surging pork prices in a sluggish economy. A turn up in the US dollar and continued economic uncertainties helped spark the late selling and weak close. The surge higher in the rib market sparked some buying interest but traders still believe that there will be significant resistance to the higher pork values from retailers and consumers. Cash was a bit higher after pork cutout values surged to $97.41 late Tuesday, up $3.08 from Monday and up from $88.30 the previous week. Tuesday was the highest pork value since October 25th of 2011. Slaughter came in higher than expected at 398,000 head. This brings the total for the week so far to 1.179 million head, up from 1.175 million last week at this time but down from 1.206 million a year ago.
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