Commentary
April Lean Hogs opened higher and surged. The low was the opening price at 86.25 and by 10 AM the high was in at 89.875. It pulled back to test support at 88.325 and drifted the rest of the session, settling at 89.10. It was a break out session for Hogs that has been sitting in a trading range since April took over as the lead contract. The cash market has been up-ticking with both the Lean Hog Index and the pork Cutout Index moving higher. On Monday the Pork Cutout surged higher on the strength of the Belly cutout value surging. This excited bulls and price took off from the opening bell. It provided some hope that the cash market is finally starting to gain some momentum. Alas, cutouts on Tuesday took a fall, nearly giving back all of Monday’s gains as Belly’s fell apart, giving back all of Monday’s gains and then some. There is a positive, as the cash Hog market, which was mixed at midday, closed higher “on a huge negotiated run”. Packers were aggressive for the second day in a row in acquiring their needs. It will be interesting to see which area traders take the lead from on Wednesday. Futures closed above the key level at 88.325 and its high was not too far away from resistance at 90.40. If Hogs hold settlement, we could test resistance at 90.40. Resistance then comes in at 92.375 and the nearby declining 200-DMA now at 92.50. This confluence of resistance could stifle the rally. A failure from settlement could see price test support at the rising 8-DMA now at 85.775 and then support at 85.325.
The Pork Cutout Index increased and is at 83.13 as of 02/0720/2023.
The Lean Hog Index increased and is at 76.41 as of 02/17/2023.
Estimated Slaughter for Tuesday is 479,000, which is above last week’s 477,000 and last year’s 471,000. The estimated total for the week (so far) is 961,000, which is below last week’s 962,000 and above last year’s 942,000.
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 23, 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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