Chicago Mercantile Exchange Lean Hog Futures Close Mixed on Thursday

Strategic Insights -

The Chicago Mercantile Exchange lean hog futures market experienced a mixed day on Thursday, with July futures benefiting from discounted prices compared to the CME lean hog index, while August futures were pressured by sales ahead of the next week's roll of August longs into October. Traders anticipated the roll due to the Goldman Sachs commodity index, which starts with next Monday's closing range. The cash live hog and wholesale pork markets provided little direction for futures trade, with cash live hog values being mixed and pork bellies futures edging slightly higher.

Key Takeaways:

  • July lean hog futures closed higher due to discounted prices compared to the CME lean hog index.
  • August lean hog futures were pressured by sales ahead of the next week's roll of August longs into October.
  • Traders anticipated the roll due to the Goldman Sachs commodity index, which starts with next Monday's closing range.
  • The cash live hog market was mixed, with Eastern market prices being soft and Western quotes slightly higher.
  • Pork bellies futures edged slightly higher, closing in low volume.
  • A 400,000-head hog slaughter was reported by the USDA after the close, but had little impact on the market.
  • Last week's out-of-town movement of frozen bellies, reported at 2.479 million pounds net-out, was seen as supportive.
  • The CME reported total belly stocks on hand as of July 2 at 45.117 million pounds, compared with 58.187 million a year ago.
  • Certified deliverable stocks were at 12.760 million, which is equivalent to 319 contracts worth of bellies.

Statistics:

  • 400,000-head hog slaughter reported by the USDA after the close.
  • 2.479 million pounds net-out frozen bellies moved out-of-town last week.
  • 45.117 million pounds of stomachs on hand as of July 2.
  • 12.760 million pounds of certified deliverable stocks.
  • 319 contracts worth of belly stocks.
  • 58.187 million pounds of belly stocks as of July 2 last year.
  • 29.800 million pounds of certified deliverable stocks as of last year.
  • 694 contracts of open interest in July as of the close.

Sources:

  • Dow Jones Commodities News via Comtex (July 6, 2006)
  • Jim Cote, Dow Jones Newswires
  • Comtex SmarTrend Alert (July 2, 2006)
  • Comtex News Network, Inc.