Cash Hog Fundamentals Weaken

The CME lean hog index is down 63 cents today (as of Aug. 2), its second straight daily decline after a nearly month-long rally. The pork cutout value fell $5.53 on Wednesday, as all cuts except hams declined, led by sharp drop of more than $26 in bellies. While cash fundamentals are likely to trend lower seasonally into year-end, we feel traders are overly pessimistic with the big discounts they have built into fall- and winter-month lean hog futures.