October Lean Hogs opened higher, made the session low at 78.60, surged to the high of the day at 80.675 and then consolidated the rest of the session, settling at 79.925. The low tested the key level at 78.80 after closing below it on Friday. The rally took price past resistance at 80.45, making a new high for the consolidation band as it pulled back into band, settling below the previous high. The low for the band is at 78.20.The October contract is trading cheap to the Lean hog Index and futures moved towards the index on Monday. October is also about to lose its status as the lead contract so it is becoming tied to the index. The index has been in decline but it is at 84.87 with futures starting the session at 78.725. The index is expected to fall again for tomorrow, but is still above the October futures. So, what we are seeing is a tightening of the basis as the futures played some catch-up to the cash but, if the index continues to fall futures could stall. The cutout index is also declining and could help put more pressure on the cash market for hogs. Production is soaring for pork and while demand is good it hasn’t been able to overcome the high levels of production. Slaughter should remain strong and with weights elevated, could keep the pressure on cutouts. We’ll see!… Settlement was above the key level at 79.80 and if price falls below the key level, it could re-test support at 78.80 and then move towards support at 77.80. If price holds settlement, we could test resistance at 80.45. Resistance then comes in at 81.70.
The Pork Cutout Index decreased and is at 94.25 as of 09/13/2024.
The Lean Hog Index decreased and is at 84.87 as of 09/12/2024.
Estimated Slaughter for Monday is 486,000, which is even with last week and below last year’s 487,021.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, September 17, 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
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