The results of the USDA Hogs and Pigs report this afternoon could help set the tone for the market into next week. With the cash lean hog index above 103.00 and a report looming, short-covering emerged this week when the October futures moved under 80.00. The surge in corn prices has hurt profitability and could eventually spark liquidation fears, but for now the market will need to absorb report news that is likely to show a plentiful supply of hogs in the US. The CME Lean Hog Index as of June 26th came in at 103.08, up 29 cents from the previous session and up from 98.97 the week before. For this afternoon's report, traders are looking for the June 1st All Hogs and Pigs and Kept for Market numbers to be around 1.3% higher than last year. Breeding supply is expected to have increased by about 0.75% from last year. Any number showing a 2% or higher increase in market hogs might be considered bearish. Slaughter came at 409,000 head yesterday, which was higher than expected. This could suggest strong demand from the packer. This brings the total slaughter for the week so far to 1.595 million head, up from 1.577 million last week at this time but down from 1.606 million a year ago. Pork cutout values, released after the close yesterday, came in at $96.15, down $3.41 from Wednesday and down from $98.46 the previous week. This constitutes a major setback from the highs, and it is the lowest value since June 18th. July and August hogs closed sharply higher on the session yesterday. July pushed to its highest level since March 8th, even with a weaker cash market. Short covering has emerged due to the discount. Retailers are likely to take a wait to see attitude on pork buying in order to assess weekend clearance. Packers also need fewer hogs for slaughter for next week. This may limit the positive impact of slow producer marketings that have resulted from the Midwest heat.