Walsh Trading Daily Insights
Commentary
December Lean Hogs gap opened at the high of the day, testing the 21-DMA at 84.325 as it made the high at 84.175. It didn’t like what it saw and turned south and headed to the session low at 82.825. This is a new low for the recent down move and it is just below support at 83.25, which led to consolidation the rest of the session. Settlement was weak, as the close was below support at 82.975. Cutout and cash prices are lagging despite excellent export sales indicating, in my opinion a lack of pricing power in the wake of a strong dollar and a perception that hog numbers are increasing and slaughter is going to surge in the coming weeks, keeping pressure on cash prices. Well… it has not started yet as the slaughter pace remains below last years and weights are down not up which to me indicates producers are current in their marketing. China has been active in the pork market recently as issues with inflation and producer debt load problems persist. One of their largest producers are in negotiations with debtors to try to stave off bankruptcy proceedings. China is supposedly reversing their strict covid policy which wood increase demand for everything, in my opinion as consumers are released from their confines. China’s pork production is going up, yet they are in our markets once again… We have an issue with our poultry industry as turkey supply is projected lower which could lead to more ham served for Thanksgiving… Disease is affecting the industry as the Bird Flu continues to infect flocks. The USDA is forecasting higher production in 2023 for pork and a declining export market. Proposition 12 still hangs over the market and the Supreme Court is expected to issue its ruling by February 2023. The new low and the settlement below support keeps the pressure on bulls and follow-through to the down side could see price test support at 81.70. Support then comes in at 80.45. If price can recover from 83.325, we could see price re-test resistance at the 21-DMA. Resistance then comes in at the declining 8-DMA now at 84.975.
The Pork Cutout Index decreased and is at 98.08 as of 11/03/2022.
The Lean Hog Index decreased and is at 92.34 as of 11/02/2022.
Estimated Slaughter for Friday is 468,000 which is below last week’s 487,000 and last year’s 473,000. Saturday slaughter is expected to be 164,000, which is above last week’s 122,000 and below last year’s 231,000. The estimated total for the week (so far) is 2,577,000, which is above last week’s 2,557,000 and below last year’s 2,612,000.
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 10, 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
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Fax: 312.256.0109
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