CME hog futures continued to decline with runs/slaughter running at historically high levels. Record amounts of US pork production are forecast for the next 9 months and US export demand will have to improve to move through the supply.
Daily pork product prices closed lower by with the carcass under pressure due to the sharp slide in cash belly bids. Cash bellies have shed $.80/pound since its August top and a further drop to $.92-.96 in the composite is anticipated. The belly market has been the bell weather for CME hog futures.
The monthly hog chart to the left offers the potential to form a head and shoulders bottom. It’s likely that spot futures could drop to $51-53 for a 3rd quarter seasonal low. Our view remains bearish with a bottom expected during the middle of the 4th quarter.