CHICAGO (Dow Jones)--Pit-traded Chicago Mercantile Exchange hogs finished firm Monday on futures that were at bullish price discounts to CME's lean hog index. Traders also bought deferred months and sold forward contracts on spreads.

Spreads involve trading two or more contracts at the same time while capitalizing on the price differences between them.

Lean hogs traded negatively for the better part of the morning following Friday's wholesale pork price slip and steady-to-lower cash hog returns Monday. The Dow Jones Industrial average inability to surface above positive trading territory and the higher dollar deterred early hog buying interest.

The stock market's weakness, which was still linked to European debt concerns, and the resulting flight to the dollar could temper domestic and foreign demand for expensive pork items.

Initial spot-June selling ensued after the contract slipped below 100-day moving average support which tripped sell orders.

Nonetheless, bullish speculative traders were motivated by the prospect that retail pork buying interest could pick up next week as post-Memorial Day grilling gets underway. And, some believe packers will chase hogs soon to accommodate what is usually a huge Saturday kill following the holiday.

Spot-June finished up 0.42 cent a pound, or 0.5%, at 81.87 cents. Nearby-July closed up 0.10 cent, or 0.12%, at 82.37 cents.

CME pork bellies finished higher following Friday's steady fresh belly quote at $120 per hundredweight. That day's U.S. Department of Agriculture April total belly stocks figure was considered positive for futures because it came in below forecasts.

The CME's weekly belly storage report will be available Tuesday after 5 p.m. EDT.

Spot-May closed 1.90 cents higher, or 1.7%, at 112.00 cents. Nearby-July ended 1.20 cents higher, or 1.2%, at 102.70 cents.

Cattle Complex

Live cattle at the exchange settled weak due to spillover from outside market negativity and cash cattle price uncertainty.

Cash-basis cattle last week sold for $96 to $98 per hundredweight, compared with $100 the week before. No packer bids or asking prices were reported Monday.

And unstable equities markets, along with the dollar's steep climb, restricted futures' upward mobility because of bearish implications both could have on demand for high-end beef cuts.

Nonetheless, front-month cattle contracts at times traded positively because of short-covering and futures' price discounts to last week's cash cattle sales.

Furthermore, before the CME live cattle pit opened at 10:05 a.m. EDT, June and August were technically undervalued based on their 26% and 30% Relative Strength Index readings. Any month's RSI signal of 30% or below suggests that contract is oversold and subject to an upward adjustment.

Market bulls were encouraged by Friday's monthly cattle-on-feed report. The data was in line with expectations and didn't show the significant increase in April cattle placements that some had expected.

Spot-June live cattle closed down 0.25 cent, or 0.3%, at 91.12 cents a pound. Nearby-Aug finished down 0.42 cent, or 0.5%, at 90.20 cents.

Feeder cattle at the exchange finished lower on sell orders that were tripped below the market after front months slipped beneath recent lows. Spreaders sold August and bought May.

Spot-May closed 0.67 cent lower, or 0.6%, at 108.07 cents. Most-actively traded Aug ended 1.30 cents lower, or 1.2%, at 108.85 cents.


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