July Lean Hogs gap opened higher and made the session high at 98.20. It was unable to sustain the success and fell back closing the gap and it kept on going lower the rest of the session to the low at 96.225. It settled just above the low at 96.275. The opening strength couldn’t take out resistance at 98.475 and the turnaround and lower move took price below support at 97.30 and it stalled just above the May 30 low at 95.875. The early excitement was over a strong Friday cutout and a rebounding Lean Hog Index. The failure to hold the rally is likely over disbelief the cash market could sustain the recovery, in my opinion. The futures premium to the index continues to get whittled away and bearish traders are maintaining control over the market with futures settling in the lower end of the session and recent trading range. The cutout rally on Friday was below the recent high and the Monday cutout pulled back a bit keeping cutouts in a trading range along with the Lean Hog Index. It has climbed off its recent lows but is still unable to break higher, keeping it in the low 90’s. This has sucked the life out of futures, in my opinion. Exports rebounded nicely in last week’s report as Mexico came back to the market in a big way but with slaughter and weight levels high, it is just enough to keep prices from collapsing, in my opinion. It seems consumer demand is adequate and the retail industry may not have pricing power to drive consumer prices higher keeping cutouts and cash prices in check. Hence, futures working lower, more in line with the cash market. It will take a strongly rising cash market to put some energy into futures prices, in my opinion. A failure from the low could send price down to test support at 95.30. Support then comes in at 93.50. If price can hold settlement, we could test resistance at 97.30. Resistance then comes in at 98.475.
The Pork Cutout Index increased and is at 102.03 as of 05/31/2024.
The Lean Hog Index increased and is at 91.49 as of 05/30/2024.
Estimated Slaughter for Monday is 483,000, which is above last week’s 2,000 and last year’s 464,706.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, June 04, 2024, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
tested support at the
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