June Lean Hogs made a new high for the up move on Wednesday, trading up to 105.725. Thursday’s price action saw some early weakness after opening unchanged from Wednesday’s settlement and failing in an attempt to rally out of the gate. The failure sent price to the low of the day at 103.95, taking out Wednesday’s low in the process. The market righted itself and rallied the rest of the session to the high at 105.40 and settlement was near the high at 105.00. This was lower than the Wednesday high so, we can say the market consolidated after making a new high the previous day. I think the opening breakdown was the result of export sales pulling back after the week prior’s strong showing and there seemed to be some fear that Tuesday’s one pork cutout value may have been the high as Wednesday saw a lower pork cutout after making the new cutout high. The fear wasn’t warranted however, as the Thursday morning cutout was strong. As traders heard cutouts were good, the market rallied. The rally however, wasn’t strong enough to make a new high, but it settled above the key level at 104.35 for the second day in a row. Traders could be enthused on the open on Friday as Thursday saw a new high in the cutouts, getting closer to 100.00 with a 98.15 carcass value. Cash also continued to grind higher as we are in the seeing improved demand for pork by the consumer and hog supply is starting its seasonal decline. We are in grilling season now and grocers are preparing for better prospects for pork purchases as many feel beef prices are high and we will likely see some consumers back away from beef and buy the cheaper pork products. If settlement holds, it could test the Thursday high. A new high could lead to a test of resistance at 106.85. A failure from settlement could see price test support at 104.35. Support then comes in at the rising 8-DMA now at 102.90.
The Pork Cutout Index increased and is at 95.35 as of 04/03/2024.
The Lean Hog Index increased and is at 85.15 as of 04/02/2024.
Estimated Slaughter for Thursday is 491,000, which is above last week’s 489,000 and last year’s 483,612. The estimated slaughter for the week (so far) is 1,829,000, which is below last week’s 1,946,000 and last year’s 1,929,389.
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