Bear spreading turned more active yesterday, helping to support nearby futures and push June hogs to their lowest levels since July 26th. Talk that the liquidation phase may not last as long if corn prices continue to weaken helped to support the spreading. The fund rolling period also helped to pressure the October and support the December contracts.

The jump in pork cutout values late yesterday may prove to be enough to slow the cash market bear trend. Hefty near-term supply had packers bidding $1.00 lower in the cash market at many locations yesterday. However, slaughter continues to come in above trader expectations with 437,000 head estimated for yesterday. This brings the total for the week so far to 873,000 head, up from 437,000 last week at this time (a holiday-shortened week) and up from 850,000 a year ago. Slaughter on Monday at 436,000 head was the highest daily slaughter since December 2009.

The CME Lean Hog Index as of September 7th came in at 72.07, down 1.96 from the previous session and down from 80.29 the week before. This leaves October at a 65-point premium to the cash market, up from a discount of nearly 2000 points just a few weeks ago as the cash trend has accelerated down in the past few weeks.

Pork cutout values, released after the close yesterday, came in at $79.16, up 96 cents from Monday but down from $80.63 the previous week. A jump in ham prices lent support. Hams were up $6.56 to $65.50.

Monthly pork exports for July came in at 397.89 million pounds, which was up 3% from last year but still down from monthly exports of nearly 500 million pounds late last year. Exports represented 23.1% of the USDA pork production for the month of July.

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