December Lean Hogs collapsed in the aftermath of the surprisingly bearish Quarterly Hogs and Pigs report. Thursday saw a surge in Hog prices as traders cleaned up positions in front of the report. It took price to just under resistance at 76.175 as, in my opinion, traders feared a bullish surprise in the report. That didn’t happen and the Friday open saw price open lower and grind for a while, before giving way and falling down limit. The spot October contract also settled down limit. Traders expected USDA’s Hogs & Pigs Report to show the hog herd contracted fractionally as of Sept. 1. Instead, it showed the herd size up 194,000 head (0.3%) from year-ago – 787,000 head more than the average pre-report estimate implied. The breeding herd contracted 1.2% from last year but the market hog inventory increased 268,000 head (0.4%). Market hog inventories indicated slaughter will run slightly above year-ago through winter. Slaughter for this week I think adds to the excessive supply thoughts as it dwarfed last weeks and last year’s numbers. This could continue to pressure cutouts and keep cash prices at bay as near-term supply looks to be strong, which could continue to frustrate bulls. December Hogs made the high at 73.675 and the low at 71.775. It settled down limit at the low. Settlement was just below support at 71.85. If Hogs can retake 71.85, price could test resistance at 72.80. Resistance then comes in at the declining 8-DMA now at 73.75. Continuing lower could see support tested at 71.325. Support then comes in at 69.90.
The Pork Cutout Index declined and is at 97.80 as of 9/28/2023.
The Lean Hog Index was unchanged and is at 86.14 as of 9/27/2023.
Estimated Slaughter for Friday is 473,000, which is below last week’s 478,000 and above last year’s 449,000. Saturday slaughter is expected to be 208,000, which is above last week’s 121,000 and last year’s 111,000. The estimated slaughter for the week (so far) is 2,604,000, which is above last week’s 2,537,000 and last year’s 2,485,000.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, October 03, 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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