October hogs closed lower on the session yesterday after the market pushed to the highest levels since April 14th. Expectations for declining prices ahead from a gradual increase in production into the fall left October hogs at a significant discount to the cash market. Many traders continue to watch for a seasonal peak but with strong export interest and the recent sharp drop in weights, supplies remains relatively tight. July heat may have taken a toll on breeding efficiency, and this may show up as smaller than expected production for the 1st quarter of 2012. With pork cut-out values moving to new all-time highs in each of the past six trading sessions and packers willing to pay higher prices, new sellers have been discouraged and short-covering is providing underlying support. Cash hogs were trading steady to $1.00 higher yesterday and look steady to higher today. The CME Lean Hog Index as of July 29th came in at 102.26, up 75 cents from the previous session and up from 97.50 the week before. The estimated hog slaughter came in at 401,000 head yesterday. This brings the total for the week so far to 748,000 head, down from 800,000 head last week at this time but unchanged from a year ago. Pork cutout values released after the close yesterday came in at $106.23, up 86 cents from Monday and up from $101.31 the previous week. Cash bellies traded at a record high $150.86 from $138.56 last week.