Commentary
February Lean Hogs made a new low for the down move, trading down just past support at 79.80 to the low at 79.70. Price rebounded hard and it raced to the session high at 81.625. The rally stopped just under resistance at 81.70 with the high and low established by 11am (CST) and it consolidated the rest of the session settling at 80.80. The deferred contracts were stronger and I think their strength helped the Feb contract settle in positive territory. The cash market continues to struggle and it is being reflected in the indices and the front futures contract. It is interesting that the cash markets are struggling to gain some footing when demand seems to be fairly strong for pork. Maybe hogs are priced just right…. Us exports are strong as November exports of pork were the largest of 2022 in both volume and value. The USDA released November exports and pork exports reached 245,663 metric tons (up 3%) and value climbed 10% to $725.1 million in November. Exports for both stats were the highest since May 2021 while Jan through Nov export remain below the same time period last year. It is down 10% at 2.43 mt and valued just under $7 billion (down 7%). Exports to Mexico and the Dominican Republic were at record levels and improvements were seen in China/ Hong Kong, South Korea and the Philippines. This is a positive for Hogs and with Europe and the US continuing to lose production, Hog and pork prices could see a recovery going forward. If Hogs hold settlement, we could revisit resistance at 81.70. Resistance then comes in at 83.325. A failure from settlement could see price test support at 80.45 and then revisit the Monday low. Support then comes in at 78.80.
The Pork Cutout Index decreased and is at 85.55 as of 01/06/2023.
The Lean Hog Index declined and is at 77.49 as of 01/05/2023.
Estimated Slaughter for Monday is 491,000 which is above last week’s 25,000 and last year’s 447,000.
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Ben DiCostanzo
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