Hog Futures Rally, Cash Ticks a Little Lower: CME hog futures closed higher on Tuesday, with October narrowing the spread to the cash index ahead of this month’s expiration. December hogs were firmly above the 200-day moving average. June hogs pressed to a new rally high, marking the best close since early June, and were nearly $11 over the August low.
The CME cash hog index was down 2 cents on Tuesday at $84.01, and AgResource estimates a $.12 gain for Wednesday. The pork cutout value gained $.69 on Tuesday to $96.53 and is $2 higher than a year ago, while cash hog prices are about unchanged. Estimated slaughter margins, as measured by the live-to-cutout spread, are at a 9-week high of $33 and $3 higher than a year ago. The spread is expected to widen in the coming months as cash hog prices fall faster than wholesale pork values.
CME hog futures have held up surprisingly well in the last 2 weeks. But a deeper seasonal decline should be underway by the middle of the month. AgResource targets a cash market low of $65, to be reached later in the quarter.
