April Lean Hogs gap opened lower and tried to close the gap. It rallied to the high at 81.025 leaving the smallest possible gap with Wednesday’s low at 81.05. The failure to close the gap sent price on a downward trek to the session low at 79.625. It drifted from here before rallying into the close to settle in the middle of the range at 80.35. The breakdown took price below support at 80.45 and 79.80. The recovery into the close couldn’t settle above 80.45 but, created a hammer candle formation. This could potentially lead price higher on Friday if it can open strong and rally through the gap. The breakdown came about, in my opinion as traders feared the stalling of the strength in the cutouts, as it has been falling all week and sending the index lower. The recovery came about as the morning cutout stabilized. It bounced off the week low and the final number continued to gather strength closing over 2 bucks higher although on a weaker load count. This put the one-day cutout at 86.36, back in the middle of its 82.12 – 90.17 range. This may give futures the needed oomph to create some short-covering into the Friday close. Of course, the cutouts have to continue to at least stay in the middle of the range, in my opinion. If price can overcome resistance at the gap close (81.05), it could test resistance at 81.70. Resistance then comes in at the rising 13-DMA now at 82.625 and then 83.325. If price can’t hold settlement, we could revisit support at 79.80. The flattening 200-DMA is next at 79.125 and the rising 21-DMA is next at 79.05.
The Pork Cutout Index decreased and is at 86.84 as of 02/07/2024.
The Lean Hog Index increased and is at 74.02 as of 02/06/2024.
Estimated Slaughter for Monday is 491,000, which is above last week’s 482,000 and last year’s 482,881. The estimated total for the week (so far) is 1,957,000, which is above last week’s 1,955,000 and last year’s 1,917,094.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, February 13, 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
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