Commentary
February Lean Hogs opened at the low of the session at 83.85 and rallied to the high by late morning at 86.00. Some consolidation afterwards and a pullback at the end of the day led to a disappointing settlement at 84.575. The rally took price past the 85.325 resistance level but it couldn’t challenge resistance at the declining 13-DMA now at 86.50. The pullback and settlement put price below the key level at 85.325 and the rising 50-DMA now at 85.15. A disappointing development indeed, in my opinion. The rally did close the tiny gap from the December 8th high at 85.90 to the December 7th low at 85.95. I think there is hope the Chinese relaxing covid policy will lead to a pickup in demand for pork. The weak settlement however, puts Hogs behind the 8-Ball and a failure from here could see price revisit support at 83.325. Support then comes in at 81.70. A rally above 85.325 could see price revisit the Tuesday high and then challenge the 13-DMA. Resistance then comes in at 87.10.
The Pork Cutout Index ticked higher and is at 86.91 as of 12/12/2022.
The Lean Hog Index decreased and is at 81.47 as of 12/09/2022.
Estimated Slaughter for Tuesday is 487,000 which is below last week’s 491,000 and above last year’s 469,000. The estimated slaughter for the week (so far) is 977,000, which is above last week’s 974,000 and last year’s 954,000.
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, December 15, 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.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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