August hogs traded higher early in the session on Friday and managed to take out Thursday's peak to move to the highest level since mid-March, but there was a lack of new buying interest on the rally. This sparked a sell-off, and the market ended up closing 0.60 lower on the day and 1.40 down from the early highs. Cash hogs were steady to higher, but traders did not seem too optimistic that supply will remain tight, as marketings tend to rise seasonally into August and September. The CME Lean Hog Index as of July 25 came in at 96.12, up 20 cents from the previous session and up from 95.17 the week before. The estimated hog slaughter came in at 396,000 head Friday and 10,000 head for Saturday. This brought the total for last week to 2.003 million head, up from 1.961 million the previous week and up from 1.989 million a year ago. Pork cutout values, released after the close Friday, came in at $92.27, down 64 cents from Thursday but up from $91.21 the previous week. The jump in pork prices last week provided some support to hogs, but that seemed to play itself out on Friday, and the lower cutout value on Friday could spark some selling today. It could also be difficult for the hog market to continue to gain when it looking a potential culling of the herd and slower than last year export demand. Last year, the markets pushed up on Chinese demand, but that looks less likely this year. The Commitments of Traders Futures and Options report as of July 24th showed non-commercial traders were net long 34,814 contracts, a decrease of 4,861 contracts for the week. Non-commercial and nonreportable traders combined held a net long position of 19,055 contracts, a decrease of 5,532. Commodity index traders held a net long position of 97,907 contracts, a decrease of 683 contracts. The selling on the part of the large and small speculators and by index funds is a negative force.
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