Commentary
April Lean Hogs consolidated within Friday’s trading range forming an inside candlestick. It basically traded both sides of the key level at 85.325 with the high at 86.525 and the low at 84.625 and settlement just above it at 85.45. In my opinion, bulls want to buy this and take it higher but get frustrated with the inability of the cash market to give them a leg to stand on. With cutouts and cash hogs treading water, rallies are hard to sustain. Rumors abound on how hams are bottoming and other cuts are trying to firm but the fact is even with lower slaughter numbers sustainable rallies in cutout prices have not occurred, in my opinion. I don’t see hoe producers are going to expand supply if they can’t make any money. Our exports, in my opinion have been good, near record levels yet analysts ( at least the ones I have read) are complaining we aren’t selling enough. We are near record levels folks! But, even with strong exports cutouts and cash are not moving higher. With April the lead contract and trading at a stiff premium to the cash, rallies may continue to stall as bears laugh at the bulls and strike them down. Hog futures are extended at these levels and bulls need the cash market to turn around, in my opinion. If Hogs hold settlement, we could test resistance at the Friday high at 86.55. Resistance then comes in at 87.10. A failure from settlement could see price re-test support at the 21-DMA at 84.475. Support then comes in at 83.325.
The Pork Cutout Index decreased and is at 79.10 as of 01/20/2023.
The Lean Hog Index declined and is at 72.65 as of 01/19/2023.
Estimated Slaughter for Monday is 489,000 which is above last week’s 424,000 and last year’s 452,000.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, January 26, 2022 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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