While the August hogs appear a bit overbought after the 4-day surge from 88.15 to 96.32, the CME Lean Hog Index as of June 28th came in at 102.11, down 54 cents from the previous session and up from 101.42 the week before. This leaves August at a discount to the cash market. The estimated hog slaughter came in at 420,000 head yesterday, which was well above trade expectations and could be seen as a sign of stronger demand from the packer. This was up from 384,000 last week and up from 1,000 a year ago as this time. While this would normally strengthen the market, the stiff break in pork product prices led by weakness in loins and ribs was seen as a factor which could keep cash market trade sluggish next week. Pork cutout values, released after the close yesterday, came in at $93.85, down $1.58 from Friday and down from $101.29 the previous week. August hogs traded up as much as 155 points higher early in the session yesterday and closed just 20 higher on the day and near the lows of the session. The market pushed to the highest level since March 15th early as after positive news from the USDA Hogs and Pigs report on Friday. In addition, traders see hot weather and high humidity as reasons to suspect lower Midwest marketings this week. Weakness in the pork market on Friday helped to pressure the market off of the highs as well and there are some demand concerns developing as the heat and humidity on the East Coast could keep consumer demand slower than expected for the 4th. With near 25% of US production on the export market, exports will still be a major factor for prices ahead. The less fearful outlook for the global economy late last week provided a positive tilt to prices.
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