June Lean Hogs is now the lead contract as its volume has overtaken the volume for the April contract. The June contract continued its plunge since becoming the lead contract, breaking down to 98.80 and settling lower on the day at 99.30. The high was at 100.95. Since June has become the lead, traders have been stripping some of the premium June has over the Cash Index. With June trading over 100, the rubber band effect I talk about came into play as so far trader’s believe futures are too far out in front of the index, in my opinion. Cash has been strong but lately the pork cutout has started to falter causing traders to think in the short-term the index will come down and limit the upside in the cash index. I say short-term because I think the cutouts and cash will strengthen as we near the grilling season. Grocers will start buying product to prepare for this seasonality and with demand strong for pork and beef prices reaching all-time highs, pork is relatively cheap and may cause grocers to get aggressive. Our exports remain strong and this combination could lead to a surge in cutouts and as numbers naturally decline during this time period, lead to stronger cash prices packers pay producers. We’ll see!… A failure from settlement could see price test support at 98.475. Support then comes in at 97.30. If futures can hold settlement, it could test resistance at 100.075. Resistance then comes in at 101.975.
The Pork Cutout Index ticked higher and is at 93.07 as of 03/20/2024.
The Lean Hog Index increased and is at 83.25 as of 03/19/2024.
Estimated Slaughter for Thursday is 490,000, which is above last week’s 473,000 and below last year’s 491,754. The estimated total for the week (so far) is 1,952,000, which is above last week’s 1,898,000 and last year’s 1,922,790.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, March 26, 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.
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