Walsh Trading Daily Insights
Commentary
December Lean Hogs consolidated within Monday’s trading range, forming an inside candlestick. It made the low on the open at 84.65 and rallied to the high at 85.85, which tested the declining 50-DMA now at 85.85. Unable to move past resistance, futures tested the low again by late morning. It settled at 85.20. A dull trading session. Fundamentals have been burdensome as cutouts and cash prices work lower. Hog weights have been seasonally rising but are lower than last year showing in my opinion, a market that is short product. But packers have been able to get hogs with only a couple of aggressive purchase days per week as producers have been letting hogs go as feed prices remain high. Belly prices have collapsed and has not shown any signs of recovery. In China, hog producers have been struggling with the number 2 producer Jiangi Zhenbang Technology Co Ltd in danger of going bankrupt. It expanded rapidly in 2020 and 2021, going heavily into debt and as hog prices fell last year and had to go to local governments to help cover feed costs. In some areas it is said they were unable to feed their hogs. It is negotiating with its creditors but is unsure if there will be any agreement to keep the company afloat. Would a failure cause a fire sale on hogs in China? Would China have to then go on a major importing program to meet there needs afterwards? Will they get taken over? Will the government intervene on their behalf to maintain some sort of stability? Only time will tell…. We’ll see… If hogs fail below the low, we could test support at 83.325. Support then comes in at 81.70. If settlement holds, we could see price re-test resistance at the declining 50-DMA. Resistance then comes in at 87.10.
The Pork Cutout Index decreased and is at 99.06 as of 10/31/2022.
The Lean Hog Index ticked higher and is at 93.79 as of 10/28/2022.
Estimated Slaughter for Tuesday is 489,000 which is below last week’s 490,000 and above last year’s 481,000. Monday’s slaughter was revised lower to 486,000. The estimated total for the week (so far) is 975,000, which is above last week’s 973,000 and last year’s 955,000.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, November 03, 2022 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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