Lean hog futures closed lower, pressured by a $3 to $10 per hundred pound drop in fresh belly prices in Thursday's midday wholesale pork market report and caution among traders ahead of the monthly cold storage report.
May hogs fell 0.85 cent, or 0.8%, to $1.0205 a pound. June, the most active contract, was off 1.35 cents, or 1.3%, at $1.0005.
Concerns that domestic demand could turn slow at the high prices weighed on futures, said Don Roose, analyst with U.S. Commodities. In addition, meat movement through the grocery stores over the long weekend may not be as brisk as had been hoped for due to forecasts of cool wet weather for parts of the country, he said.
In addition, while the dollar remains weak, which would benefit export sales, it also contributes to higher crude oil and gasoline prices, which may result in fewer dollars left for spending on meats.
Some traders took profits ahead of the holiday weekend from gains made during the rally earlier in the week, a broker said. A few traders elected to exit their positions before the monthly cold storage data and holiday weekend.
The U.S. Department of Agriculture's pork carcass composite value Wednesday was up slightly to $96.34 but traders focused on the weakness indicated in belly prices Thursday.
The drop in belly prices suggests that the market ran up too fast and too soon in the season for bacon processors to recoup the higher costs in the prices received from their customers, a broker said.
At times, a sharp price move in either direction may be just a short-term adjustment that lasts only a day or two then the market may return to where it was before, said Rich Nelson, director of research with Allendale Inc. He prefers to watch the market for a period of a few days to determine a trend.
Cash hog prices Thursday were expected to be mostly flat overall but with some processors possibly not participating in the trading due to several plants being closed either Friday or Monday in observance of the Easter holiday.
The terminal markets traded mostly flat with one location up $0.50 per hundred pounds and tops from $63 to $64.50 on a live basis.