Commentary
February Lean Hogs had an uneventful Friday, consolidating within the Thursday range and forming an inside candlestick. The Friday range was 79.40 high to 77.675 low, with settlement at 78.65. The high approached resistance at 79.80 and the low pushed through support at 77.80. Settlement was below the key level at 78.80 so, in my opinion, the bears are still in control. The cash market continued its bearish posturing, with the indices down again and the daily cutouts unable to hold a positive morning report. Slaughter was huge this week as it looks to me the packers played catch up with holiday and weather related cutbacks the past couple weeks. Slaughter should start to pull back below last year’s figures going forward as the Hogs and Pigs report implied, in my opinion. If Hogs hold settlement, we could test resistance at 79.90. Resistance then comes in at 80.45. A failure from settlement could see price re-test support at 77.80. Support then comes in at 76.175.
The Pork Cutout Index decreased and is at 81.54 as of 01/12/2023.
The Lean Hog Index declined and is at 75.49 as of 01/11/2023.
Estimated Slaughter for Friday is 486,000, which is above last week’s 453,000 and last year’s 424,000. Saturday’s slaughter is expected to be 281,000, which is below last week’s 420,000 and above last year’s 149,000. The estimated total for the week (so far) is 2,688,000, which is above last week’s 2,296,000 and last year’s 2,367,000.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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