December Lean Hogs opened higher, dipped to the low of the day at 70.075 and then rallied the rest of the session to the high at 73.375. It settled near the high at73.275. Hogs reversed a bearish Wednesday trade with its break down to just above support at 69.90. The surge took out resistance at the 50% retracement (72.05) of the September 20th high at 78.70 to the October 20th low at 65.40 and approached the 61.8% retracement at 73.625. It still leaves bears in control of the price action however, with its inability to take out the 61.8% retracement and the October 6th high at 73.675. The cash market continues to sag as the cash index and the cutout indices have continued their decline. Slaughter levels remain elevated and weights have increased while exports have remained strong even with the US Dollar in the upper end of its trading range. US demand has also been good as the grocery industry has priced pork to sell since spring-time. There is a lot of product out there and packers haven’t had to get aggressive to purchase hogs. This rally could fall apart soon if the cash market doesn’t turn around. Where we had a rally because futures became too cheap to cash even as the index dropped, now it has continued likely because traders believe the holiday season could be good because of a perceived shortage of ham stocks. The indies decline has slowed and could be bottoming. There is strong resistance up above our current levels so be wary of this rally, in my opinion. A pullback from settlement could see support tested at 72.80 and then the 50% retracement level. We then have support at the 71.85 to the 71.325 support band. If Hogs can take out the September 20th high, it could test resistance at 74.25 and the nearby declining 50-DMA now at 74.625.
The Pork Cutout Index ticked lower and is at 86.76 as of 10/31/2023.
The Lean Hog Index decreased and is at 77.13 as of 10/30/2023.
Estimated Slaughter for Wednesday is 487,000, which is above last week’s 486,000 and last year’s 485,000. The estimated total for the week (so far) is 1,931,000, which is below last week’s 1,941,000 and last year’s 1,945,000.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, November 07, 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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