Despite that fact that traders expect a sharp increase in demand for hogs during Labor Day weekend, CME futures began the week trading poorly. According to Agriculture Professional, this is due to a forecasted oversupply of pork.
Many traders expect CME hogs to weaken significantly on Friday, as a decrease in prices is seen for slaughter-ready or cash hogs and wholesale pork prices. Based on USDA data, the average price of hogs on Friday in Iowa/Minnesota dropped $1.03 per cwt from Thursday to $103.65, according to Reuters. October hogs slipped 0.67 cents to 94.27 cents/pound, while December was down 1.27 cents to 87.77.
Government data showed the wholesale pork price fell $4.39 from last week, at $111.80 per cwt, mainly due to the $8.39 decrease in pork belly costs.
The October contract's discount to CME's hog index at 116.42 cents is likely to attract speculators. Reuters reports that the short-covering and bargain-hunting that helped hog contracts recover on Friday might spill over in later sessions.
Meanwhile, CME didn't report any cattle deliveries last week against the live cattle August contract that is set to expire on Aug. 29
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