CHICAGO (Dow Jones)--Short-covering and signs of improved market fundamentals boosted Chicago Mercantile Exchange hogs Friday.

Thursday's wholesale pork price bounce, after six straight days of slippage, and pockets of higher cash hog returns Friday emboldened bullish traders.

Those searching for bargains were drawn to June and July bullish price discounts compared to CME's lean hog index. Both months' 22% Relative Strength index conditions also lured speculative buyers.

Any contract's RSI reading of 30% or less suggests it has become oversold and subject to an upward correction.

CME hog traders were also impressed by the stock market's ability to distance itself from early-session losses in response to negative May U.S. retail sales results.

Lean hog players said financial-sector resilience could bolster consumer confidence in the economy which should shore up sales of expensive pork items.

Spreading out of July into August was common during the otherwise lackluster session. Spreads involve trading two or more contracts simultaneously while capitalizing on the price differences between them.

CME livestock trading floor population dwindled, which reduced market liquidity, after several traders left to join the parade a few blocks away to celebrate the Chicago Blackhawks hockey team's Stanley Cup championship.

Spot-June hogs closed up 0.50 cent a pound, or 0.6%, at 77.77 cents. Most-actively traded July finished 0.85 cent higher, or 1.1% at 78.55 cents.

Low-volume CME pork bellies finished firm on pre-weekend short covering.

Spot-July ended up 0.20 cent, or 0.2%, at 95.95 cents. Nearby-August finished up 0.10 cent, or 0.1%, at 94.10 cents.

Cattle Complex

Spreading out of front months into distant contracts and uneasiness about a seasonal upswing in cattle numbers weighed on CME live cattle Friday.

Cattle futures actually rose at first after buying from the market's rally Thursday carried over into Friday's open. Also June and August remained underpriced based on this week's cash cattle trade.

Cash-basis cattle this week moved at $92.50 to $93 per hundredweight, compared with $94 to $95.50 last week.

Live cattle appeared to track the Dow Jones Industrial Average that at one point surfaced in positive trading. But beef futures also slipped after the DJIA drifted back into moderately bearish territory.

Recent periodic equities-sector breaks have made cattle traders somewhat jumpy because it hints at reduced near-term domestic and foreign demand for high-end beef cuts.

June and August later receded to four-month lows as wholesale beef prices continued their downward spiral.

The federal government's Friday afternoon boxed beef data, which reflects beef prices at the wholesale level, showed choice cuts slid $1.79 per hundredweight, and select items dropped $0.67.

Spot-June live cattle closed down 0.57 cent a pound, or 0.6%, at 89.50 cents. Most-actively traded August finished down 0.50 cent, or 0.6%, at 87.27 cents.

CME feeder cattle also settled down slightly on profit-taking. Contracts were also overpriced according to CME's feeder cattle index.

Spot-August closed down 0.15 cent, or 0.1%, at 110.07 cents. Nearby-September ended down 0.17 cent, or 0.2%, at 109.85 cents.


-By Theopolis Waters, Dow Jones Newswires; 312-347-4965; theopolis.waters@dowjones.com