Commentary
February Lean Hogs opened at the low of the session at 81.65 and a massive wave of short covering took price up nearly going limit up in the process to the high at 86.275. The surge took place in my opinion, as price opening at Thursday’s settlement wasn’t able to take out Thursday’s low price at 81.525 and the FOMO (fear of missing out) (The low in this case) took over and the race to cover was on. The rally stalled just above resistance at the 13-DMA now at 85.975 and it settled below it at 85.775. The close is at some critical levels in my opinion as there is a confluence of key levels surrounding the settlement price. There is also strong resistance just above the high and it is in a down trend so Hogs still face a lot of hurdles from a bullish perspective. A failure below support at 85.325 could see price fall back and give up some, most or all of the Friday gains. There is support at the 8-DMA now at 84.375 and then the key level at 83.325. Support then comes in at 81.70. A rally above the Friday high could see price test the declining 21-DMA now at 86.95 and then nearby resistance at 87.10. The 100-DMA is next at 88.075.
The Pork Cutout Index ticked higher and is at 87.30 as of 12/15/2022.
The Lean Hog Index rose and is at 81.68 as of 12/14/2022.
Estimated Slaughter for Friday is 461,000 which is below last week’s 475,000 and last year’s 477,000. Saturday slaughter is expected to be 199,000, which is above last week’s 147,000 and below last year’s 329,000. The estimated slaughter for the week (so far) is 2,596,000, which is above last week’s 2,570,000 and below last year’s 2,655,000.
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 22, 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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