October Lean Hogs started the session with a bang, gap opening higher and trading to the high at 78.70. It failed just below resistance at 78.80, breaking down hard to the session low at 76.65 and then grinding higher to settle right at the key level at 77.80. The cash market continued its surprising run of strength with both the cutout and cash index trading higher after its recent fall from grace. Traders seemed to believe the cash market couldn’t continue higher and put pressure on futures. However, cutouts showed some more bullish tendencies on Thursday as the Cutout made a new high which should keep the index moving higher on Friday. The cash index is also expected to show a higher level on Friday, which could reinvigorate bullish traders on Friday. Exports continue to impress as the US sold 30,300 MT of pork to other nations, comfortably above the 5-year average of 27,700 MT. Shipments also impressed at 32,900 MT, which is also strongly above its 5-year average of 28,670 MT. So, importers are still aggressively buying pork and taking it from US pork producers. You have to like that as it is going against the norms, showing there is still great demand for our pork overseas. This is needed as exports play a bigger role for hog producers than for beef, in my opinion. Slaughter levels have been declining but in my opinion are still higher than last year. This is also helping even though it is higher than last year as our exports are firm and taking supply where it is needed, keeping pork flowing and not backing up as weights remain much higher than last year keeping production at elevated levels. China continues to be in the US market which is helping but they have not made huge purchases recently. All that means to me is that they are due to make a big purchase as their production is down, their prices are rising, and they are fighting with the European Union. If they stay in our market, I think they will come in with a large purchase sooner rather than later as they want to buy before the price surge which could come as we get into August. We’ll see!… The price action formed a potentially topping action as the candle formed a hanging man candlestick, which when occurring at the high of a rally like it did today could see some profit taking if hogs don’t take out the Thursday high. A failure from settlement could see price test support at 76.175. Support then comes in at 75.60. If price can take out resistance at 78.80, it could test resistance at 79.80. Resistance then comes in at 80.45.
The Pork Cutout Index increased and is at 103.02 as of 07/24/2024.
The Lean Hog Index increased and is at 90.77 as of 07/23/2024.
Estimated Slaughter for Thursday is 475,000, which is even with last week and above last year’s 459,177. The estimated slaughter for the week (so far) is 1,888,000, which is below last week’s 1,909,000 and above last year’s 1,855,215.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, July 30, 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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