A sluggish demand environment, fears of a potential slowdown in pork exports if the global economy sputters and ample near-term supply leaves the short-term cash market outlook weak. However, futures already hold a stiff discount to the cash market so some of this weakness is already priced. August and October hogs closed sharply lower on the session yesterday after some higher trade early in the session. The market absorbed a steady stream of selling from speculators to drive futures moderately lower and down to the lowest level since June 27th. Talk that cash could trade higher due to packer demand and hotter weather next week helped to support the market early. However, weakness in pork and fears of weak consumer demand due to the weather helped to pressure. Cash was trading steady to $2.00 lower at terminal locations. Monthly pork exports for the month of May came in at 448.2 million pounds, which was up 9.4% from last year but also the lowest monthly total since September of 2011. Exports for the month of May represented 23.3% of total usage. Slaughter came in at just 390,000 head, which was below expectations and suggests weak packer demand. This brings the total for the week so far to 1.178 million head, up from 845,000 last week at this time but down from 1.211 million a year ago. The CME Lean Hog Index as of July 9th came in at 100.42, down 16 cents from the previous session and down from 101.76 the week before. This leaves August and especially October hogs at a huge discount to the cash. Pork cutout values, released after the close yesterday, came in at $89.57, down 2 cents from Tuesday and down from $91.56 the previous week. Pork is at the lowest level since June 13th. Weekly average weights for Iowa-Southern Minnesota as of July 7 came in at 269.0 pounds, down from 270 the previous week and up from 266.6 pounds last year. Weights have come down rapidly for five weeks in a row but remain above last year and well above the 5-year average for this time of the year at 264.6 pounds.
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