Commentary
June Lean Hogs opened lower and rallied to the session high at 91.575. The market reversed course and took out the previous 2 inside candle lows and then broke down below support at 90.40 and the declining 200-DMA now at 90.35 and traded down to the Friday low and then to a new low since June took over as the lead contract. It tested resistance at 90.40 (support becomes resistance) and then broke down and settled near the low at 89.35. The lower close keeps the pressure on bulls and with the cash market continuing to weaken it puts pressure on producers and they are frustrated and confused by the inability of pork to strengthen. If prices stay down, watch out for producer liquidation and getting out of the business, in my opinion. The frustration is real, and, in my opinion, they are tired of working hard and not seeing results. Especially when they look over at cattle and see it remaining near its all-time highs and its cutout price just recently setting highs for this time of year. A failure from settlement could see price test support at 88.325. If price can hold settlement, we could test resistance at the aforementioned levels. Exports are out before the open and exports for the most part have been good which is even more frustrating for producers as foreign demand hasn’t helped prices.
The Pork Cutout Index dropped and is at 82.92 as of 03/21/2023.
The Lean Hog Index declined and is at 78.67 as of 03/20/2023.
Estimated Slaughter for Wednesday is 478,000, which is below last week’s 479,000 and last year’s 482,000. The estimated slaughter for the week (so far) is 1,422,000, which is below last week’s 1,448,000 and last year’s 1,424,000.
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, March 23, 2023, 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.
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