Commentary
April Lean Hogs ended the week on a lackluster note, trading within Thursday’s range and settling unchanged from its settlement. The high was at 83.775, the low 82.625 and settlement was 83.325. It didn’t bother to challenge upside resistance and only trickled above and below the key level at 83.325. (Settled right at it for second day in row). There is a confluence of resistance just above the Friday high, from the declining 8-DMA and the rising 21-DMA (both) now at 84.175, the flattening 100-DMA at 84.475, the declining 13-DMA now at 84.975, the flattening 50-DMA at 85.025 and finally the 85.325 resistance level that is holding back Hogs. Not to forget to mention April futures are rich to the cash index, makes it difficult to be bullish Hogs. The cutout market remains locked around the 80.00 level and is having a difficult time sustaining strength. Cash hogs have moved higher since making a low at 72.11, which is a positive, but remember futures are rich to cash and with February expiring next week, April will be both the lead contract and the spot contract. If cash doesn’t start gathering steam to the upside, traders may decide the premium April has to the index is too wide. And then wham!!! A snap back towards the cash index. Slaughter this week has dipped below last year’s slaughter for the 1st time in a few weeks. This … with weights below last year could lead to a production decline and maybe higher cutouts??? Could it also mean we are finally seeing the end of the excess supply driven by December’s bad weather. Could it lead to a jump in cash prices as packers may have go after supply??? We’ll see … If Hogs hold settlement, we could re-test resistance. A failure from settlement could see price re-test support at 81.70 and the 81.275 low. Support then comes in at 80.45.
The Pork Cutout Index decreased and is at 79.75as of 02/09/2023.
The Lean Hog Index ticked higher and is at 73.80 as of 02/08/2023.
Estimated Slaughter for Friday is 481,000, which is below last week’s 484,000 and above last year’s 471,000. Saturday slaughter is expected to be 93,000, which is below last week’s 173,000 and last year’s 143,000. The estimated total for the week (so far) is 2,498,000, which is below last week’s 2,595,000 and last year’s 2,513,000.
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, February 16, 2023, 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
888.391.7894
Fax: 312.256.0109
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