Commentary
April Lean Hogs made its high in the first ten minutes of trade, reaching 86.25 and then plummeting to the low by mid-morning at 84.00. It worked higher the rest of the session and settled at 85.375. The trade down to the low took price below the 21-DMA now at 84.325 and the bounce kept futures near its recent consolidation highs and a confluence of long-term key levels. Settlement was right in between these levels as the key level at 85.325 and the 100-DMA at 85.30 was below settlement and the 50-DMA at 85.60 above. In my opinion a move away from this area will lead to its next directional play. The cash market is still struggling despite in my opinion good exports and the idea China’s reopening will lead them to import more pork going forward as the people enjoy their new found freedom from lockdowns. I think eventually and probably sooner than later we will see cash prices rebound. We’ll see…. If Hogs hold settlement, we could test resistance at the Friday high at 86.55. Resistance then comes in at 87.10. A failure from settlement could see price re-test support at the 21-DMA. Support then comes in at 83.325.
The Pork Cutout Index ticked lower and is at 79.04 as of 01/23/2023.
The Lean Hog Index declined and is at 72.13 as of 01/20/2023.
Estimated Slaughter for Tuesday is 484,000 which is below last week’s 487,000 and last year’s 471,000. The estimated total for the week (so far) is 973,000, which is above last week’s 911,000 and last year’s 923,000.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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