Commentary
June Lean Hogs opened on weakness, trading to the low of the day at 88.725 and then found its footing and sprinted to the session high at 90.15. It consolidated the rest of the session and settled at 89.95. It was an extremely positive day for Hogs in relation to the cattle, grain and most outside markets which for the most part suffered serious losses in value, in my opinion. The cash market and cutouts seemingly have bottomed as they are rising and are expected to continue on an upward path, while the cattle cutouts and cash are starting to feel toppy. Consumers may start looking at pork as beef prices are starting to look expensive and beef cutouts are the highest ever except for the pandemic time period where cutouts rose to extreme levels. There has been a lot of sow liquidation as producers have been frustrated by the weak cash prices and have been in liquidation mode. This could reduce the hog population going forward and mess up the USDA’s next Hogs and Pigs report. Hog slaughter is starting its decline and this could also put upward pressure on cash prices. We’ll see! Thew seasonality aspect is also here as the summer demand or grilling season is upon us. Could there be a calming down of beef prices and a rise in pork? We’ll see! The rally on Tuesday stalled in front of resistance at 90.40. The low was above support at 88.325. If Hogs can rally past 90.40, we could test the Monday high at 91.425. Resistance then comes in at the Friday high at 92.00 and then 92.375. A failure from settlement could see price revisit the Tuesday low and then support at 88.325. Support then comes in at the declining 21-DMA now at 88.225.
The Pork Cutout Index increased and is at 79.23 as of 05/01/2023.
The Lean Hog Index increased and is at 72.10 as of 04/28/2023.
Estimated Slaughter for Monday is 459,000, which is below last week’s 470,000 and last year’s 481,000. Monday’s slaughter was revised lower to 449,000. The estimated slaughter for the week (so far) is 908,000, which is below last week’s 939,000 and last year’s 957,000.
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, May 04, 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.
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