Commentary
June Lean Hogs gap opened lower, broke down to the session low at 87.40 and then rebounded, racing to the high at 89.35, closing the gap and then floundering the rest of the session, settling in the middle of the range at 88.375. The breakdown took price to a new low for the June contract as the lead contract, with the bounce keeping price above support at 88.325. It also tested support at 87.10 and at least for now was the stopper. It is getting monotonous to say this, but the cash market remains weak and futures prices are finally starting to reflect this picture. April did rally today as yesterday’s breakdown made price cheap to the index, imagine that… and recovered today, getting closer to the index. It expires April 17th and if Cash can’t rally sooner rather than later, it will continue to put pressure on the June contract as it continues to trade at a premium to cash. After April 17th, it will become both the lead contract (by volume) and the spot contract. Cash is still expected to rally, in my opinion, since hog slaughter typically turns significantly lower beginning in early April, whereas consumer pork demand surges as grilling season gets underway. The onset, size, and length of the spring advance are the main questions for the hog and pork markets at this point. It is still early, but if things don’t pick up after the Easter holiday…. If Hogs can hold settlement, we could test resistance at the declining 200-DMA now at 89.525. Resistance then comes in at 90.40. If price falls below support at 88.325, we could see support tested at 87.10.
The Pork Cutout Index decreased and is at 78.25 as of 04/04/2023.
The Lean Hog Index declined and is at 74.68 as of 04/03/2023.
Estimated Slaughter for Wednesday is 477,000, which is even with last week and above last year’s 452,000. The estimated total for the week (so far) is 1,443,000, which is even with last week and above last year’s 1,411,000.
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, April 06, 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.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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