Lean hog futures fell Wednesday after a multi-day rally, as traders took profits and positioned themselves ahead of a government report that will provide data on consumer demand for pork.

July hog futures fell 0.8 cents, or 0.8%, to 98.10 cents a pound. The August contract fell 0.6 cents, or 0.6%, to 97.35 cents a pound.

Analysts said futures were under pressure from traders selling to exit positions and book profits after a four-day rally in hogs that mirrored a sharp run-up in futures for live cattle.

Investors will be watching a cold-storage report from the U.S. Department of Agriculture that comes out after the market closes Wednesday. The amount of meat in cold storage provides a signal on demand with inventories swelling when buying slows. Analysts will key in on the May numbers to see if demand increased after April when consumers likely opted for chicken over pork to cut their grocery bills.

"This cold storage report is going to be something we will follow closely," said Rich Nelson, director of research at brokerage Allendale Inc. "Normally it's a side item, but this one will be important."

The USDA is expected to report frozen pork supplies as of May 31 at 511.1 million pounds, down 34.7 million pounds, or 6.4%, from a month ago, according to the average prediction of three analysts in a Dow Jones Newswires survey. If the average estimate is correct, the amount of pork in cold storage at May 31 was still 14.6% above a year ago, but about 1% below the five-year average.

Pork processors are currently seen losing money on the hogs they slaughter as they scurry to fill orders for the 4th of July weekend. Some brokers expect cash prices to start falling next week as packers begin a seasonal slow-down in production.

CASH MARKETS

Cash bids for hogs in the Midwest direct markets Wednesday are expected to be mixed after processing margins have been further squeezed. Deeply negative processing margins could cause some plants to reduce their slaughter schedules rather than continue to pay more for hogs, analysts said. Other processors may have to pay steady to higher prices to get enough hogs to fill their sales commitments.

Seasonally reduced hog supplies and stiff competition among processors for the available animals sent cash prices up sharply on Tuesday, especially in the western corn belt. The USDA's national weighted average price hit an all-time high.

Meanwhile, the USDA's carcass composite value, a measure of wholesale prices, Tuesday was down 2 cents to $96.63 a hundred pounds.

The latest Dow Jones Newswires pork packer margin index was minus $12.76 per head, compared with minus $2.60 per head the previous day.

Analysts estimate Wednesday's slaughter to be around 403,000 head.

The terminal markets were expected to trade steady to higher with top prices seen from $64 to $68 a hundred pounds on a live basis.

The latest CME two-day lean hog index, calculated using USDA market data, for Monday was up 1.17 cents to 95.72 cents a pound.