Hogs Make New Low

Ben DiCostanzoGeneral Commentary

June Lean Hogs gap opened lower, reversed course and rallied to the session high at 100.675. The rally closed the gap with the high just above the previous day’s settlement. The market couldn’t sustain the rally and it fell to a new low for the down move at 99.375. This was all done before 9:30 CT and the market drifted the rest of the session and settled in the middle of the range at 99.925. It formed a Spinning Top candlestick formation, indicating indecision in the market. When the Spinning Top forms at either the high or the low for a move, it could indicate a reversal in the making. Friday’s trade could determine whether a short-term low is in place. The cash markets have been strong leading to the upward movement in Hog futures. Traders were excited the cash market was stronger than last year as consumer demand and exports have been strong. But recently, the cash markets have stalled. Traders then proceeded to narrow the futures premium to the Lean hog Index. Futures couldn’t sustain its momentum when the indices faltered. Now it is struggling as it looks like traders don’t have as much faith that the cash markets can produce a strong spring rally like it did last year. Cutouts rallied through early August with the index peaking at around 114.54. May 2nd of 2023 it was at 80.20.  We are starting at a much higher level. (see below). With pork more expensive now, maybe we don’t reach the same levels. Maybe we shoot even higher. Last year the rally was 34 handles. The same surge would put the index at around 132 – 133. That could propel futures in my opinion. We’ll see!… Settlement was below the key level at 100.075. A failure from settlement could see price move lower and test support at 98.475. Support then comes in at the rising 50-DMA now at 97.45. If price can reclaim 100.075, we could test resistance at 101.975. A strong close near resistance could establish a bullish pattern.  

The Pork Cutout Index increased and is at 98.23 as of 05/01/2024.

The Lean Hog Index increased and is at 90.60 as of 04/30/2024.

Estimated Slaughter for Wednesday is 481,000, which is below last week’s 485,000 and above last year’s 471,520. The estimated total for the week (so far) is 1,919,000, which is below last week’s 1,936,000 and above last year’s 1,862,179.

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, May 07, 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.

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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163


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