February Lean Hogs opened higher, made the session low at 67.125 and reversed course, surging to the high at 70.475, going limit up and settling up limit at 70.475. Friday’s session should see the limit expand to 5.5 handles. Strong exports seem to be the driving force for the rally as traders hope strong overseas demand could turn cash prices higher going forward. Cutouts and cash prices however, continue along with their struggles and have been unable to sustain any strength when it shows up. The price action sliced through various resistance levels and stopped (because of the limit) right at the 38.2% retracement level (70.475) of the 78.70 high from September 20th to the 65.40 low from October 20th on the continuous chart. Settlement was above long-term resistance at 69.90 and the flattening 50-DMA now at 70.075. This is positive for Hogs but it must show continued strength on Friday in my opinion, because it has failed at this retracement level before and the rally has only taken price back into the middle of its recent trading range. If futures hold settlement, we could see a re-test of resistance from 71.325 – 71.85. Resistance is nearby at the 50% retracement level at 72.05. Resistance then comes in at 72.80. If futures pull back and consolidate on Friday it could test support at the rising 13-DMA now at 69.175 and then 68.75. Support then comes in at 67.80. The December contract expired on Thursday at 67.175.
The Pork Cutout Index increased and is at 84.69 as of 12/13/2023.
The Lean Hog Index increased and is at 68.13 as of 12/12/2023.
Estimated Slaughter for Thursday is 489,000, which is above last week’s 488,000 and last year’s 474,000. The estimated total for the week (so far) is 1,914,000, which is below last week’s 1,946,000 and last year’s 1,930,000.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be on Tuesday, December 19, 2023, 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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