The market is still struggling to determine the impact of last week's East Coast storm will be on demand and just how much of an offset will occur once the region begins the re-stocking process. In addition, increasing supply in the weeks just ahead combined with record cold storage stocks leaves the short-term price outlook uncertain. Given the steep drop in production from this quarter to the first quarter of 2013 and a continued drop into the second and third quarters, it may be tough for traders to turn very negative based on short-term supply situation.
December hogs closed 12 lower on the session Friday and lost 115 points for the week. The market traded moderately higher on the day into the pit opening but saw choppy to lower trade for much of the session. April and June hogs also closed lower on the day and June pushed to the lowest level since October 17th. Cash markets were steady to $1.00 lower as packer demand for new inventory was somewhat lacking. Positive margins for the packer and a discount of futures to the cash market helped to provide some underlying support. A bearish tilt to outside market forces helped to pressure.
The estimated hog slaughter came in at 428,000 head Friday and 220,000 head for Saturday. This brought the total for last week to 2.359 million head which was down 20,000 head from last week but up 10,000 from last year. The CME Lean Hog Index as of October 31st came in at 83.52, down 46 cents from the previous session and down from 85.22 the week before. This leaves December at a stiff discount. Pork cutout values, released after the close Friday, came in at $85.56, down 10 cents from Thursday but up from $85.17 the previous week.
The Commitments of Traders reports as of October 30th showed Non-Commercial traders were net long 42,072 contracts, an increase of just 723 for the week. Commodity Index traders held a net long position of 87,516 contracts, down 818 for the week.
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