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The move to a new 14-month high for pork cut-out values leaves the cash market outlook positive into early next year and into next week but February hogs are now down near the pre-Thanksgiving levels. Traders see a possible back-up of hogs in the country and a seasonal peak in ham values as a “reason” to liquidate long positions into the end of the year. News that Russia was banning imports from seven US plants due to excess antibiotic level was also seen as a reason to liquidate. Pork cut out values, released after the close yesterday, came in at $66.78, up 42 cents from Tuesday and up from $62.32 the previous week which is the highest trade since October of 2008. Hams were up $1.89 to $73.13 as compared with $67.33 last week at this time. Weekly average weights for Iowa/Minnesota for the week ending December 5th came in at 269.9 pounds, up from 269.5 the previous week and up from 269.3 pounds last year. The CME Lean Hog Index as of December 7th came in at 60.75, up 77 cents from the previous session and up from 57.63 the week before. Cash is called steady to $.50 higher today as packers try to build some inventory for a large Saturday kill. December hogs closed moderately higher on the session yesterday while February closed slightly lower. February closed more than 100 points off of the early highs as weakness in cattle and other commodity markets and ideas that the weather will just cause a back-up of hogs in the country and could cause weights to increase helped to pressure. Feeder Pig imports from Canada for the week ending November 28th came in at 99,369 head, up from 80,590 head the previous week and compared to a 4-week moving average of 92,487. Feeder pig imports for the year have reached 4.7 million head, down 23.7% from last year. The estimated hog slaughter came in at just 307,000 head yesterday. This brings the total for the week so far to 1.144 million head, down from 1.282 million last week at this time and down from 1.292 million a year ago.
TODAY’S GUIDANCE: A further long liquidation break looks like a good buy as the cash fundamentals into early next year look bullish. Key buying support for February hogs comes in at 64.52 with 68.82 and 69.15 as the next upside targets.
