Wed 01 May 2013 07:57:20 CT
With the market trying to hold onto a normal premium to the cash market, news of weaker pork values may be enough to spark some profit-taking selling in the short-term. Pork cutout values, released after the close yesterday, came in at $85.69, down $1.64 from Monday but still up slightly from $85.65 the previous week. Weakness in loins, ribs and cash bellies helped to pressure. The CME Lean Hog Index as of April 25th was 82.42 up 1.00 from the previous session and up from 81.09 the previous week. This leaves June hogs at a premium of 1,015 to the cash market as compared with the 5-year average for this time of the year at a premium of 1,114.
June hogs closed moderately higher on the session yesterday day but failed to take out Monday's reversal-type highs. However, it was still the highest close since February 15th. Cash hogs traded mostly $1.00-$1.50 higher on the day as strong pork cut-out values (highest since February 26th) helped to provide underlying support. The advance in pork values and a firm tone to the cash market helped to support the recovery bounce yesterday. Talk that up to one foot of snow in western Iowa had mixed reviews. Most traders see the cold weather as a negative for demand while others indicated that the snow could temporarily slow movement.
Slaughter came in well below trade expectations at 418,000 head which can sometimes suggest sluggish demand from the packer. This brings the total for the week so far to 833,000 head, down from 836,000 last week at this time but up from 825,000 a year ago. Packer margins narrowed with the break in pork overnight and there appears to be ample supply. Traders also believe that pork export demand has slowed which leaves more pork on the domestic market.
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