October Lean Hogs gap opened lower and made the session high at 73.875. The market broke down to the low at 72.35. The breakdown took price below support at 72.80 and it was able to bounce back and it challenged the high but couldn’t take it out and settled near it at 73.625. The price action formed a Hammer candlestick and could be indicating it hammered out a low. Futures need a positive open and take out the gap and follow-through higher or we could retest the Thursday low. Making a new low could see price test support at 71.85. Support then comes in at 71.85. If we get upside follow-through, price could test resistance at 74.25. Resistance then comes in at 75.60. The cash market reversed course from the strength it had been showing. We have had strong exports but cutouts have fallen hard the past 2 days, breaking down below 100.00 and will be driving the pork cutout index lower. Cash hogs have declined and the index has pulled back from its recent highs. Hog supplies have outpaced our strong exports and US consumption as seasonals are working for hog supplies. We do have some hope as we should see some retail aggression as we get closer to the Labor Day holiday. Slaughter levels for this week have been surprisingly weaker so this eventually could lead to a bounce back in cutouts and cash. We’ll See!…
The Pork Cutout Index decreased and is at 102.90 as of 08/07/2024.
The Lean Hog Index decreased and is at 93.10 as of 08/06/2024.
Estimated Slaughter for Thursday is 463,000, which is below last week’s 481,000 and above last year’s 476,289. The estimated total for the week(so far) is 1,837,000, which is below last week’s 1,916,000 and above last year’s 1,836,975.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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