February Lean Hogs rallied on Thursday, trading up to Tuesday’s high at 73.05 and dipping to settle at 72.60. The low came early in the session at 71.425. This price action has formed a Tweezer Top formation with the matching highs. It is a potentially bearish formation going into Friday. Weather issues has caused a slowdown in slaughter and we are seeing an increase in the cash markets. Traders are hoping the low is in and the seasonals are taking over going forward. Grocer’s have been passing reduced prices on to consumers after keeping prices elevated during the same time period last year. It is hoped this will help clear out elevated supplies and along with the recent snow and expected frigid weather next week, slaughter will continue to struggle. This may help with cash and cutout prices, hence the rally in futures. Also, the Easter Holiday comes early this year and we could see Hams featured in an aggressive manner to move product. The Tweezer Top however, and pullback into the close at resistance could see price pullback into the weekend. We’ll see… The high took price past resistance at 72.80 and the declining 100-DMA now at 72.70 and it settled below these levels. A failure to reclaim resistance, could pressure price and test support at the 71.325 – 71.85 support band. Support then comes in at the 50-DMA now at 70.30. If futures take out the Tweezer Top, We could see a test of resistance at 74.25.
The Pork Cutout Index increased and is at 84.87 as of 01/10/2024.
The Lean Hog Index increased and is at 66.46 as of 01/09/2024.
Estimated Slaughter for Thursday is 490,000, which is below last week’s 491,000 and above last year’s 488,277. The estimated total for the week (so far) is 1,809,000, which is above last week’s 1,452,000 and below last year’s 1,925,000.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be delayed to Tuesday, January 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.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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