February Lean Hogs gap opened higher and rallied to the session high at 84.625. It reversed course and broke down the rest of the session to the low at 83.50. It settled near the low at 83.625. The Wednesday cutout jumped higher, and traders started the day with enthusiasm taking price to its high. But continued profit taking in my opinion, saw traders press the market and it worked lower all session. With traders expecting an easing of cash and cutout prices in the near term, the surprising ability of the cash market to hold its own has slowed the price action as traders want to take profits before year-end but they are starting to be wary of the cash market strength so are proceeding cautiously. The expectation is still for the cash market to work lower so if the cash market starts to falter liquidation could speed up and bears could start to build a short position. This could pressure futures prices even lower. Exports continue to falter as we near the end of the year and consumer demand should weaken into the holidays as the focus is on beef in my opinion. Prices are consolidating within the December 16th trading range, so it holds the key for the next move in Hogs. We’ll see!… If price breaks down from settlement, it could test support at 83.325. Support then comes in at the rising 50-DMA now at 82.575. If price can hold settlement, it could test resistance at the declining 8-DMA now at 84.15. Resistance then comes in at 85.325.
The Pork Cutout Index increased and is at 94.70 as of 12/18/2024.
The Lean Hog Index increased and is at 84.17 as of 12/17/2024.
Estimated Slaughter for Monday is 487,000, which is below last week’s 489,000 and above last year’s 479,223.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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